Branch vs subsidiary: what are the differences?

31 Mar 2025

Professionals reviewing branch vs subsidiary options

Expanding your business into the UK is a strategic move that can open new opportunities and markets. However, choosing the right structure to set up in the UK is crucial for the success of your business; the most common structures are a branch or subsidiary.

At Saffery, we specialise in helping international businesses navigate this decision and support their business as they set up and grow in the UK.

Branch vs subsidiary pros and cons

When considering expansion into the UK, you have two primary options: establishing a branch or setting up a subsidiary. Each option has its own benefits and considerations, and the right choice depends on your specific business needs and goals, both practical and strategic.

What is a branch?

A UK branch is an extension of your existing non-UK company, operating in the UK but not as a separate legal entity. This means that the existing non-UK company remains liable for the branch’s operations, debts, and obligations.

However, it’s important to consider that the parent company is fully liable for the branch’s activities, and some clients and other partners may prefer dealing with a local entity rather than a branch of a foreign company. This can give rise to practical issues in terms of engaging with suppliers, payment terms offered, and ability to open a UK bank account.

What is a subsidiary company?

A subsidiary company is a separate legal entity incorporated in the UK and registered with Companies House. The creation of a UK subsidiary which is then owned by the parent non-UK company. It has the ability to operate independently, with its own management and financial structure.

Setting up a subsidiary company involves a higher level of administrative processes, and regulatory compliance, compared to a branch. One example of a potentially additional cost of a subsidiary that needs to be considered, may be an audit requirement. Our separate article examines whether your UK subsidiary requires an audit. Please reach out if you think you may require an audit.

In the table below, we consider some of the key differences and similarities between a UK branch and a fully owned UK subsidiary:

Making the right choice

The decision between a branch and a subsidiary depends on a range of factors, including your business objectives, the level of control you wish to maintain, and your risk tolerance. Here are some questions to consider:

  • What are your long-term goals in the UK market?
  • How important is limited liability to your business?
  • What are the regulatory and compliance requirements for each option?
  • How will each option impact your tax and filing obligations?

Get in touch

Choosing the right structure for your UK operations is crucial for your business’ success. While a branch offers simplicity and cost-effectiveness, a subsidiary provides limited liability and a stronger local presence.

Contact Tom Alun-Jones today to discuss your options and find out how we can help you establish a successful presence in the UK.

Contact Us

Tom Alun-Jones
Partner, London

Key experience

Tom advises a range of commercial clients including owner-managed and international businesses across multiple sectors.
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