VIA
  • How it works
    Hiring EmployeesGlobal HiringHiring ContractorsGlobal PayrollCrypto Currency SalariesHR ComplianceEmployer of Record (EOR)Professional Employer Organization (PEO)Global BenefitsInternational Background Check
  • Countries
  • About us
    About usCareers
  • Partners
  • Pricing
  • Blog
Log in

Set up Your Subsidiary in UK

All Countries > Uk
hammer 99b6e398e3

Capital

London

Handshake

Official Language

English

Tailormade 1

Currency

Pound Sterling

Payroll Desktop

Payroll cycle

Monthly

Via offers complete Payroll, EOR and Contractor mangement services for the UK
UK Flag

Quick facts about the UK

Home to one of the world’s most important financial centers, the United Kingdom is now seeing new startups pop up in areas such as insurtech, edtech, and alternative finance. It’s too early to know how Brexit will affect the United Kingdom in the long run. Regardless, many employers are still interested in hiring people based in the country. The United Kingdom’s impressive education system and diversity make it one of the most appealing countries to find top talent.

More info

To set up your subsidiary in the UK, you will need to follow a thorough legal process in order to avoid improper setups, which can lead to unnecessary fines and legal action. You will need to learn about all of the key laws in the UK surrounding employment and taxes.

Most importantly, you will need to:

  • Set aside time and money to travel back and forth to the UK

  • Make sure that you set up a legal team as support that gives you advice on proper incorporation and

  • Establish a strong HR team to handle accounting and run payroll

Here is an overview of everything foreign corporations and businesses should consider before opening a subsidiary in the UK, as well as other alternative options to establishing a legal entity within the country

Subsidiary

How to open a subsidiary in the UK

To begin the subsidiary process, you will need to verify your Standard Industrial Classification of Economic Activities (SIC). This process helps identify exactly what your business does and how it will function in the United Kingdom.

You will also be required to create a PSC register containing details for the Person’s Significant Control. This identifies all of the shareholders in the subsidiary.

The most common form of subsidiary set-up is a private UK limited company (LTD). To complete all of the necessary steps of incorporation for an LTD, you must do the following:

  1. Apply for the Companies House for the standard registration process

  2. Have at least 1 named director

  3. Have a registered address for the director as well as a residential and service address

  4. Name at least one other individual as a shareholder or the parent company as a shareholder

  5. Provide companies statutory accounts to Companies House

  6. Register for corporation tax (in most cases)

  7. Register for VAT and payroll tax

  8. Open a UK bank account

Filing the paperwork with the Companies House for the UK subsidiary only takes a few hours, but it can take a while to gather all of the required documents for incorporation. Most importantly, the subsidiaries Articles of Association must be filed with the Companies House.

UK subsidiary Laws and regulations

As the overseas parent company, you will need to make sure that you are closely governing your entity in the UK.

As the employer, you are required to take money out of your employee’s paycheck for PAYE tax and for their National Insurance Contributions. As an employer, you are also required to obtain a liability insurance plan with a minimum coverage of 5,000,000 GBP.

Parent companies are required to pay corporate taxes on all UK profits to Her Majesty’s Revenues and Customs (HMRC). Depending on the size of your company, you may need to make quarterly payments instead of annual payments.

Because employees are so well protected by laws in the United Kingdom, you need to make sure that you offer generous benefits and salary that are equal to the work that they are doing for your subsidiary.

Subsidiary Pros & Cons

Pros and cons of setting up UK subsidiary vs. branch

As the parent company, there are two main options for setting up business in the UK. You can set up either a branch or a subsidiary, with subsidiaries being the most popular option. However, branches do have some advantages.

Local opportunities

Subsidiaries operate as local operations and are separate from their parent company. UK branch offices, on the other hand, are not technically resident corporations. Once a subsidiary is established, it is viewed as a local British company. As a local operation, there are more opportunities for trade and attracting employees.

Independence from parent company

As a subsidiary, you retain full independence from the foreign parent company. Independence makes it easier to tailor your business practices to British culture.

The bottom line

Setting up a subsidiary in the UK allows you a lot more freedom from the parent company, as long as you have the time and money. The process is actually relatively short, but you will need to understand some of the more complex British laws that govern businesses.

Most importantly, you will need a team of legal advisors to help guide you through tax laws, subsidiary laws, accounting, and drafting strong employment contracts to protect you from any potential lawsuits.

UK subsidiary vs. EOR: What’s right for you?

Many expanding companies want to hire employees in the UK, but aren’t sure about where to begin the process. Using a global EOR service like Via expedites the process and ensures that companies follow all hiring and employment laws correctly without having to establish a subsidiary. With Via, we help you hire, onboard, and pay remote employees across the world. As your employer-of-record abroad, we take care of the local human resources (HR) logistics, such as salary, payroll, benefits, paid leave, and tax deductions. Maintaining compliance is our responsibility. You simply focus on building your team and running your business.

If you’re looking to test out a market or start building a local talent hub based in the UK, partnering with an EOR like Via (as opposed to opening a subsidiary) is probably the strategic move.

Opening a subsidiary can be costly, as you will need to build out a team of local HR, labor, and legal experts. With Via’s transparent pricing, on the other hand, you can pay full-time employees or contractors in the UK with no hidden set-up fees, no foreign exchange or transaction fees, and no minimums–start with 1 employee and scale up at your own pace.

Country Icon
See all countries
More information for you
    Payroll in UK
    UK PEO & Employer of Record Services
    Work Visas & Permits in UK
    UK Employee Compensation & Benefits
    Hiring & Recruiting in UK

Frequently asked questions

  • What is a UK subsidiary company?

    A UK subsidiary company is formed off of a parent company that is based in another country, like the United States or Spain. The company normally operates separately from its parent company, but the parent company still retains shares in the subsidiary.

  • How do subsidiary companies work in the UK?

    Subsidiary companies in the UK function as an offset of a parent company. The parent company will hold a majority of interests in the subsidiary, with over 50% of the shares being owned by the parent company.

  • What does it mean to be a subsidiary?

    A subsidiary is a company that belongs to a parent company. The parent company holds a controlling interest in the subsidiary, but the subsidiary can be a strategic move, as you can better adapt the company’s practices to local business customs.

  • What is a wholly owned subsidiary in the UK?

    A wholly owned subsidiary in the UK means that the stock of the company is owned by one shareholder.

  • VIA
    • How it works
      Hiring EmployeesGlobal HiringHiring ContractorsGlobal PayrollCrypto Currency SalariesHR ComplianceEmployer of Record (EOR)Professional Employer Organization (PEO)Global benefitsInternational Background Check
    • Countries
      BrazilCanadaChileColombiaCosta RicaGermanyIrelandMexicoNetherlandsPortugalSpainUKUSA
    • About us
      About usCareers
    • Partners
      Partners
    • Pricing
      Pricing
    • Blog
      Blog
    • Follow Us
      emailSubscribe by emaillinkedinLinkedIn
    VIA
    Terms of ServicePrivacy PolicyCookie Policy
    © Via 2023. All rights reserved.