Expanding to the UK - which business structure is best?

Welcome to our series of short, sharp articles – all focused on going international!

To kick us off, we are looking at business structures when setting up in the UK. If you get the structure right at the start you won’t have to deal with headaches later on, so keep things as simple as possible, as you’ll have enough going on without worrying about complex business structures and international agreements.

It’s crucial to consider why you are making this move, and what your goals are. Understanding the tax obligations of each structure is also essential, as well as planning how to repatriate funds back to Australia and the potential tax implications.

Befuddled already? Don’t worry – we have got you covered, with actual experience in making these moves, and a full guide here for everything else you need to know. Let’s go!

1. Structures at a Glance

Subsidiary

A subsidiary is an incorporated body (a company) and a separate legal entity from the Australian parent company, and its worldwide profits will be subject to UK corporation tax. If you grow significantly in the UK, you’ll almost always end up with this structure, so we think it’s a great place to start.

You’ll also need to make sure the IP is sitting in the right place in the hierarchy, and there are some great tax efficient schemes (like SEIS and EIS) that are only available if the top company of the structure is in the UK.

Subsidiaries need to register with:

Companies House: you’ll need articles of association, director details, business address, annual confirmation statements and annual accounts
HMRC: corporation tax filings, VAT registration (if applicable), PAYE registration, accounts office numbers, pension, and National Insurance Contributions (NIC)

Branch

A branch is not a separate legal entity, but an extension of the parent company conducting business on its behalf in the UK, which means the parent company and its directors are responsible and liable for the branch.

To register a branch, you need to to file a form with Companies House, along with various statutory and constitutional documents relating to your parent company. Annually, the company’s accounts need to be filed at Companies House, or in accordance with company law, and a branch is taxed on any profits made in that country. It’s important to note that you can’t choose this structure if you want to have a physical presence in the UK, such as an office, you need to have a registered UK company to do that. We don’t recommend this as the structure to start with, but as always, get in touch to learn more.

Standalone

A standalone UK company operates independently, but still needs to have some relationship with overseas entities. It can involve leasing products, making royalty payments, and addressing potential IP conflicts, but please note that this structure can be challenging to implement effectively so we haven’t gone into it too much in this article (but get in touch to explore this option further).

2. What’s the best choice?

Choosing the right structure for your business can significantly impact your operations, tax obligations, and overall success. It’s important to weigh the advantages and disadvantages of each option carefully, and while it’s 100% your decision to make, we found setting up a subsidiary made it easier to engage with the local market, simpler to repatriate funds, and looks more established to investors. Also if you plan on significant growth in the UK, starting with a subsidiary can set a strong foundation for your expansion and future success.

Whether you opt for a subsidiary, branch, or standalone UK company,make sure you fully understand the implications of each structure and ensure compliance with local regulations.

What’s next?

If you’re looking at expanding your business to the UK (or anywhere else for that matter!), our team at Standard Ledger is here to support you every step of the way. Contact us in the UK here, or in Australia here to learn more about how we can help you navigate the complexities of international business expansion, and set your company up for success. Remember, we have experience doing this ourselves, so can give you honest and real information to help you on your journey.

BOOK A CALL with us for a chat, and get your business ready for the next stage of growth.

Events coming up

September 23, 2024, 4:00 pm - 5:00 pm

Expanding Your Scaleup to the UK: Legal and Accounting Considerations

Online

If you want to expand your Australian startup to the UK but you’re not sure where to start, this online event is for you.

Starting Out, Early Stage

Ready, set, go! What you need to know about raising capital. Part 1: Let’s start preparing

Welcome to our series of short, sharp articles - all focused on going international! To kick us off, we are looking at business structures when setting up in the UK. If you get the structure right at the start you won't have to deal with headaches later on, so keep things as simple as possible, as you'll have enough going on without worrying about complex business structures and international agreements.