What Is the Difference Between a UK Branch and a Subsidiary?

When expanding into the UK, foreign companies usually choose between establishing a UK subsidiary or registering a UK branch.

A subsidiary is a separate legal entity incorporated in the UK and owned by the parent company. A branch, by contrast, is not a separate legal entity but an extension of the overseas parent company that is registered to operate in the UK.

One of the main differences is liability. A subsidiary limits liability to the UK company itself, meaning the parent company is generally protected. With a branch, any liabilities incurred in the UK belong directly to the parent company.

There are also differences in financial reporting and taxation. Subsidiaries usually file their own accounts with Companies House, while branches must file the accounts of the overseas parent company together with information about their UK operations.

In practice, subsidiaries are often preferred because they offer clearer legal separation and are typically easier to work with when dealing with banks, partners, and investors.