U.K. Professional Clients
U.K. Private Customers
Reasons to register a branch or open an establishment in the UK - low corporation tax rates and easy accounting system: if you're an overseas customer looking to set up a branch or subsidiary company for the purposes of trading in the UK, you will find that there are advantages and disadvantages to both options. The main areas of benefit for those who are thinking about a subsidiary company are in the area of tax and accounting responsibilities.
Corporation tax: branches registered in the UK with an overseas parent company are subject to UK corporation tax established on the profits of that parent company that are attributable to the branch. In plain English, this means that of the profits obtained by the parent company, those that are attributed to the branch will be taxed by the UK HMRC.
However, a subsidiary will be taxed on its own world-wide profits, without reference to the parent company. UK corporation tax is normally 21% (or will be until 01 April 2015, when it will fall to 20%). A UK resident subsidiary can obtain a reduced rate for corporation tax if its taxable profits fall beneath a certain threshold. For example, companies that have less than £300,000 taxable profits will pay a rate of 20% corporation tax.
Where the company's taxable profits are between £300,000 and £1.5 million, marginal relief can also come in to reduce applicable corporation tax. The marginal rate is, at the time of writing, 21.25%, for chargeable profits in a range of £300,000 to £1.5m.
Accounting responsibilities: accounting is far easier with a subsidiary company, than it is with a branch, and there are additional benefits for the parent company in relation to accounting. A branch is compelled to file all of its accounts and its parent company's accounts to Companies House on a yearly basis. However, a subsidiary has the advantage as it it is only required to submit its own financial statements. This results in greater anonymity for the parent company, and can be seen as an advantage for some sectors of industry.