UK Business Expansion & Company Setup for Overseas Companies

UK BUSINESS EXPANSION

Your UK finance partner for expanding into the UK, from day one

The UK remains one of the most attractive places in the world to do business, but for an overseas company the first questions are the hard ones. At TaxDigit, chartered certified accountants in Guildford, Surrey, we take the time to understand your goals, then model the right structure and handle the setup, tax and compliance so you can focus on growing in the UK market.

From your first UK entity to ongoing operations, we manage the detail — company formation, VAT, payroll, corporation tax and Companies House compliance — while making sure your UK presence is efficient, low-risk and fully compliant from the start.

The problems we solve for you

Most overseas companies hit avoidable problems simply because the UK rules are unfamiliar. We remove that risk.

• Subsidiary or branch — we model both and recommend the most tax-efficient, lowest-risk structure.
• Setting up remotely — we register your company and verify overseas directors under the new ACSP rules.
• VAT and payroll — we handle UK VAT for non-established businesses and run PAYE for your UK team.
• Permanent establishment — we assess your UK tax footprint before it becomes a problem.

Why overseas businesses choose TaxDigit

We act as your single UK finance partner, so market entry is handled end to end under one roof.

• End-to-end UK market entry — formation, tax, VAT, payroll and compliance in one place.
• Chartered certified accountants who understand cross-border structuring, not just bookkeeping.
• A single, responsive point of contact that works across time zones.
• Proactive, plain-English advice that keeps your UK entity compliant as it grows.

Built around your UK growth plans

No two expansions are the same, so no two structures should be either. We look at your group, your goals and your UK activity, and advise on the most tax-efficient, fully compliant way to establish and run your UK operation.

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Subsidiary or UK establishment: choosing the right structure

The first decision an overseas business makes in the UK is also the one that is hardest to reverse. You can incorporate a UK subsidiary — a separate UK company owned by your parent — or register a UK establishment, which is the same legal entity as the parent operating through a UK presence. The wording matters: since 1 October 2009 Companies House has used the single term “UK establishment”, and earlier registrations as a “place of business” or “branch” automatically became UK establishments. “Branch” is still widely used, including in some official guidance, to describe the same thing.

How the two structures differ

The distinction is about legal separation, and it drives liability, tax and how much of your group becomes public.

• A subsidiary is a separate UK legal entity, so your overseas parent generally has no liability for its debts.
• A UK establishment is not separate from the parent, which carries the liabilities and obligations directly.
• A UK establishment must be registered at Companies House on form OS IN01 within one month of opening it.
• Registering a UK establishment can require the parent’s own accounts to be filed publicly at Companies House.
• A UK establishment is taxed on the profits attributable to it — the permanent establishment basis — not on the parent’s worldwide profits.
• A subsidiary pays UK corporation tax on its own profits and files its own Company Tax Return.

What UK registration actually involves

Most overseas businesses underestimate month one. Incorporation itself is quick; it is the registrations that follow which get missed, and several of them carry their own deadlines. We run the sequence as a single piece of work so nothing sits waiting on something else.

The month-one checklist

Everything below applies to a typical inbound entity. We confirm which items are relevant to you before we start.

• Companies House incorporation, including at least one SIC code describing what the company does.
• Identity verification, a legal requirement since 18 November 2025. New directors verify before appointment; existing directors confirm verification on their next confirmation statement during a transition period ending in November 2026; existing people with significant control who are not directors verify in the first 14 days of their birth month. Verification for LLP members and corporate officers has not yet commenced.
• A registered office address and a register of people with significant control.
• Corporation tax registration with HMRC, and VAT registration where required.
• A PAYE scheme, registered before the first payday. You cannot register more than two months ahead, and the employer PAYE reference can take up to 15 working days to arrive.
• Automatic enrolment duties, which begin the day your first member of staff starts work.
• An EORI number beginning GB if you will move goods into or out of Great Britain — see our import and export support.
• A UK business bank account, and the evidence your bank will want about the overseas parent.
• An Overseas Entity ID from the Register of Overseas Entities if the overseas entity will hold qualifying UK land.

VAT: the threshold that may not apply to you

The UK VAT registration threshold is £90,000 of taxable turnover in a rolling twelve months, and overseas businesses routinely assume they have that headroom. Often they do not. A non-established taxable person — broadly, a business with no UK establishment — has no registration threshold at all and must register from the first taxable supply made in the UK. Discovering this late means backdated VAT on sales already invoiced without it.

Making Tax Digital for VAT applies to all VAT-registered businesses unless HMRC has granted an exemption, for example on grounds of digital exclusion, religious belief or insolvency. We set the software up so your UK filings and your parent’s group reporting draw on the same underlying records rather than two sets of numbers that have to be reconciled every quarter.

The audit trap that catches small UK subsidiaries

This is the most common and most expensive surprise for a UK subsidiary of an overseas group, and it is worth stating plainly rather than burying in a footnote.

A UK subsidiary that looks small on its own numbers can still be required to have a statutory audit, because the group size test looks at the entire group of which it is a member. The Companies Act does not distinguish by geography, so an overseas parent and overseas fellow subsidiaries all count towards the test. A ten-person UK company owned by a large international group is unlikely to qualify for exemption on the group’s figures.

The fallback many groups expect to use is not available either. The parent-guarantee exemption in section 479A of the Companies Act 2006 requires the guaranteeing parent to be established under the law of a part of the United Kingdom, so since 31 December 2020 an overseas parent cannot give that guarantee. For a UK subsidiary of a large overseas group there is generally no route to exemption at all — which makes it something to budget for at the planning stage, not discover at the first year end.

Cross-border tax: treaties, transfer pricing and getting profits home

The UK has the world’s largest double taxation treaty network, covering around 120 countries. A treaty decides which country taxes what, and it is usually the difference between a workable structure and paying tax twice on the same profit. Our international advisory team reads your position against the relevant treaty before, not after, the structure is fixed.

Transfer pricing applies to transactions between your UK entity and your overseas parent or fellow group companies — management charges, intra-group loans, licence fees, shared services. There is an exemption for small and medium-sized enterprises, and the government confirmed in 2025 that medium-sized enterprises keep it. But it has a sting: the size tests are applied across the whole enterprise including linked and partner undertakings, so a UK subsidiary of a large overseas group is not an SME for this purpose however small the UK company is. The exemption also falls away where the counterparty is in a non-qualifying territory, where HMRC issues a transfer pricing notice to a medium-sized enterprise, where the transactions are relevant to a Patent Box claim, or where the enterprise elects into the rules.

Notice that the same group-wide logic catches you twice. Both the audit test and the transfer pricing test look straight through the UK company to the group behind it. If you take one thing from this page, take that.

Bringing your people to the UK

We are accountants, not immigration advisers. Immigration advice in the UK is a regulated activity overseen by the Immigration Advice Authority (IAA), formerly the OISC, and we do not provide it. But the immigration side and the payroll side are joined at the hip, and the financial evidence behind an application is ours to produce.

Where immigration and payroll overlap

We work alongside your chosen immigration adviser and cover the accounting side of what they need.

• To employ most overseas workers long-term a UK employer needs a sponsor licence from the Home Office. Irish citizens, people with settled or pre-settled status and those with indefinite leave are outside this.
• A sponsor licence application asks for evidence about the UK entity that normally comes from its accountant.
• The UK Expansion Worker visa, part of the Global Business Mobility route, lets an overseas business send a senior manager or specialist employee to establish a UK presence where the business has not yet started trading in the UK. It is capped at two years and does not lead to settlement, so once you are trading here it is not the right route.
• Anyone employed in the UK goes on a UK PAYE scheme, with employer National Insurance and automatic enrolment duties from day one.
• Employer Class 1 National Insurance is 15% above a secondary threshold of £5,000 a year, with an Employment Allowance of £10,500 for eligible employers.
• Assignments and secondments raise their own expatriate tax questions, which we handle for the individuals as well as the company.

Key UK dates and figures at a glance

Correct as at 12 August 2026. These are general figures for a typical inbound company and are not advice for a specific business — please talk to us before relying on any of them.

• Corporation tax, financial year beginning 1 April 2026: 25% main rate on profits above £250,000, 19% small profits rate up to £50,000, marginal relief in between.
• Corporation tax payment: 9 months and 1 day after the end of the accounting period, for companies outside the quarterly instalment regime.
• Company Tax Return (form CT600, with accounts and computations): 12 months after the end of the accounting period.
• Statutory accounts at Companies House: 9 months after the accounting reference date for a private company — but 21 months after incorporation for a first set.
• VAT registration: £90,000 rolling twelve-month threshold, or from the first taxable supply if you are a non-established taxable person.
• UK establishment registration: form OS IN01, within one month of opening.
• Employer National Insurance: 15% above a £5,000 secondary threshold.
• Confirmation statement: at least once every twelve months.

Frequently asked questions

Can an overseas company set up a UK company without a UK-resident director?

Yes. A UK company can be formed and run by non-resident directors and shareholders. We handle registration, ID verification and the UK registered office for you.

Should we open a subsidiary or a branch?

It depends on liability, tax and how you plan to trade. A subsidiary is a separate UK company; a branch is an extension of your overseas entity. We model both and recommend the best fit.

Do we need to register for UK VAT?

If you make taxable UK supplies, often yes, and overseas non-established businesses can have different thresholds. We assess and handle registration and returns.

What is a UK establishment, and how is it different from a subsidiary?

A subsidiary is a separate UK company owned by your parent, so the parent generally has no liability for its debts. A UK establishment is not a separate legal entity — it is your existing company operating through a UK presence, and the parent carries the obligations directly. A UK establishment must be registered at Companies House on form OS IN01 within one month of opening, and doing so can mean the parent’s own accounts are filed publicly here.

How long does it take to set up a UK company?

Incorporation itself is usually a matter of days. The realistic timeline is set by what follows: identity verification for directors, corporation tax and VAT registration, opening a UK bank account, and a PAYE scheme — the employer PAYE reference alone can take up to 15 working days. We plan the sequence backwards from your first UK payday or first UK sale.

Does our UK subsidiary need an audit?

Possibly, even if it looks small. The size test is applied to the entire group of which the company is a member, and the Companies Act does not distinguish by geography, so an overseas parent and overseas fellow subsidiaries count. The parent-guarantee exemption under section 479A is not an alternative, because since 31 December 2020 the guaranteeing parent must be established under the law of a part of the United Kingdom. We assess this before your first year end rather than at it.

Do we have to verify our directors’ identities at Companies House?

Yes. Identity verification became a legal requirement on 18 November 2025. New directors verify before appointment. Existing directors confirm verification when they file their next confirmation statement, during a transition period ending in November 2026. Existing people with significant control who are not directors verify in the first 14 days of their birth month. Verification for LLP members and corporate officers has not yet commenced. It is an administrative filing step, and we handle it as part of company secretarial work.

How is a UK branch of an overseas company taxed?

A non-UK resident company trading through a UK permanent establishment is chargeable to UK corporation tax on the profits attributable to that establishment — not on the parent’s worldwide profits. Working out what is properly attributable is the substance of the exercise, and it interacts with the relevant double taxation treaty.

Do transfer pricing rules apply to a small UK subsidiary?

They may. There is an exemption for small and medium-sized enterprises, but the size tests are applied across the whole enterprise including linked and partner undertakings. A UK subsidiary of a large overseas group is therefore not an SME for this purpose, however small the UK company is on its own figures. The exemption also does not apply where the counterparty is in a non-qualifying territory, where HMRC issues a transfer pricing notice to a medium-sized enterprise, where the transactions are relevant to a Patent Box claim, or where the business elects into the rules.

Do we need an EORI number?

You need an EORI number beginning GB to move goods into or out of Great Britain, including to and from the EU. An XI EORI for Northern Ireland is separate and requires a permanent establishment there, with a GB EORI held first. If you are only supplying services, an EORI is not needed.

What do we need to do before our first UK payday?

Register a PAYE scheme with HMRC — you cannot do this more than two months before you start paying people, and the reference can take up to 15 working days. Automatic enrolment duties begin the day your first member of staff starts work, and every UK employer has duties including assessing staff, writing to them and completing a declaration of compliance, even if nobody turns out to be eligible for enrolment. Employer National Insurance is 15% above a £5,000 secondary threshold.

Can you help with visas and sponsor licences?

Not directly. Immigration advice in the UK is a regulated activity overseen by the Immigration Advice Authority (IAA), formerly the OISC, and we do not provide it. What we do is work alongside your immigration adviser: producing the financial evidence a sponsor licence application needs, and setting up the payroll, PAYE and pension side for the people you bring over.