UK subsidiaries for Indian companies

India is now the second largest source of investment into the UK. The Department for Business and Trade counted 93 Indian projects landing here in 2025 to 2026, creating 12,687 jobs, which is more jobs per project than any other major source market. Indian groups arriving in the UK are typically not testing the water. They are opening a delivery centre, buying or serving a UK client base, or putting a European headquarters somewhere with a shared legal language.

Two sets of rules

A UK subsidiary of an Indian parent has to satisfy the UK, which is our job, and India's own rules on investing abroad, which is your Indian advisers' job. The Indian side sits under the Foreign Exchange Management Act and the Overseas Investment Rules made under it. In outline, an Indian company can invest in a wholly owned subsidiary abroad under the automatic route without prior approval, subject to a cap on total financial commitment set as a percentage of the Indian company's net worth, with the investment reported to the Reserve Bank of India through the authorised dealer bank and an annual performance report filed thereafter. Buzz does not advise on Indian law and does not pretend to. What we do is make sure the UK company is set up so that your Indian advisers can make those filings cleanly: the share issue documented on the day it happens, the valuation evidenced, the money traced from the Indian bank into the UK account, and the UK accounts available when the annual report is due.

The common failure is not that either side gets it wrong. It is that the UK company issues shares in March, no one tells the Indian advisers until the audit in November, and the reporting deadline has gone.

What we set up for an Indian parent

• Identity verification early. Every director and every individual on the ownership register must be verified by Companies House before appointment, through GOV.UK One Login or an authorised agent. Directors in India can complete it with a passport, but it needs doing before the incorporation rather than during it, which is the step most likely to add a week.
• The ownership register. Where the Indian parent is a private limited company, the register usually names the individuals who ultimately control it, not just the parent. Where it is listed on a recognised exchange, the parent goes on as an entity. Promoter-held groups need this looking at rather than guessing.
• The bank account. The slowest step, and slower where the ownership chain runs through several Indian entities. We prepare the pack in the order UK banks ask for it and open a sterling and rupee account with a regulated provider while the high-street application runs. See the bank account page.
• The intercompany agreements. Most Indian groups charge the UK company for delivery work done in India, or the UK company earns a margin on services delivered from India. Both need a written agreement and a defensible price before the first invoice, not at the first audit. See transfer pricing.

Money moving between the two

Dividends from the UK subsidiary to the Indian parent carry no UK withholding tax. Interest and royalties do: UK tax is deducted at 20% unless the UK–India double taxation convention reduces the rate and the claim has been made to HMRC in advance. Unlike the treaties the UK has with several European countries, the India convention reduces the rate on royalties, technical service fees and interest rather than removing it, so there is usually a real UK deduction to account for and a corresponding credit for the parent in India. We confirm the rate in writing for the specific payment before it is made, and file the quarterly return for any tax withheld.

People moving between the two

The UK and India have a Double Contributions Convention. An employee posted to the UK by the Indian parent can normally stay in the Indian provident fund system with a certificate of coverage obtained in India, rather than paying UK National Insurance for the period the convention allows. The convention deals with contribution liability only. It does not give entitlement to benefits in the other country, which the employee should be told before they are posted. Income tax follows where the work is done, and an executive who joins the UK board is taxable here on the pay attributable to UK duties from the first meeting.

Employees who need permission to work in the UK need the company to hold a sponsor licence, at £611 for a small sponsor or £1,682 for a larger one, taking around eight weeks, plus the immigration skills charge for each sponsored worker. Immigration advice is regulated and we do not give it, but we set the payroll and company records up so the sponsor duties are satisfiable, and we introduce an adviser.