Family Investment Companies

A Family Investment Company (FIC) can provide a tax efficient investment solution for family succession planning. A FIC is a simple to manage, cost effective vehicle which allows the founder(s) to retain control over the assets whilst distributing wealth within the family in a tax efficient manner.
The benefits of a FIC include:

  • Straight forward, simple to administer and non-tax contentious.
  • No IHT on the growth in value as it is outside the estate of the founder.
  • No immediate charge to IHT on funds loaned to the company nor on funds invested in the company, but they do remain in the founder’s estate.
  • No IHT on shares gifted to other family members provided the founder survives for 7 years.
  • The founder has control of the company, including investment and distribution decisions.
  • Tax on retained profits at 20% allowing greater growth (reducing to 18%).
  • Tax deduction for investment management fees.
  • Indexation allowance to reduce capital gains for inflation.
  • A tax efficient and flexible alternative to trusts – trusts generally suffer 45% income tax and 28% CGT on retained income and gains and an immediate 20% IHT charge on funds put in the trust.

The benefits of a FIC will depend on individual circumstances and we recommend that all options are considered as part of an individual’s overall strategy. We’d be delighted to help you explore your options.

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