Family Investment Company: how it fits your family's wider tax plan

A Family Investment Company (FIC) tends to suit families with a meaningful amount of investable wealth who want to keep control while giving later generations a share of future growth. It is less suited to smaller sums, to families who need the money back soon, or to anyone wanting a quick inheritance tax fix. We test your position against your wider plan before recommending one.

A FIC does not replace a will or other planning. Your shares and any loan you made to the company still form part of your estate, so your will must deal with them. Many families combine a FIC with lifetime gifts, a trust for part of the growth, and use of exemptions. We map all of them together so they do not clash.

Compare it with gifts of cash or assets, a discretionary trust, a pension, and simply holding assets personally. Each differs on control, tax on income and gains, inheritance tax charges, cost, and how easily you can get money back. A trust has ten-yearly and exit charges; a FIC pays corporation tax and files public accounts. The right choice follows your goals, not fashion.

No. Value leaves your estate only when you give shares away or the company's growth accrues to other people's shares. A gift of shares to another adult is normally a potentially exempt transfer, free of inheritance tax if you live seven years. Shares you keep and loans you made stay in your estate. The usual benefit is that future growth builds up outside it.

A FIC that mainly holds investments is a close investment-holding company and pays corporation tax at 25% on its taxable profits, whatever their size. Interest, rent and gains are taxed. Many dividends it receives are exempt, so a portfolio of shares can often compound with little tax inside the company. A FIC that lets property commercially, or mainly holds trading companies, can sometimes use lower rates.

Personally, you pay dividend tax of 10.75%, 35.75% or 39.35% above a £500 allowance, and capital gains tax of 18% or 24% above a £3,000 exempt amount. A FIC pays 25% corporation tax on gains and interest, with no annual exempt amount, but most dividends it receives are exempt. Tax is paid again when money is paid out to shareholders, so the comparison depends on how much you need to withdraw.

There are three ordinary routes: repayments of a loan you made to the company, which are not income; interest on that loan, which is taxable income to you; and dividends, which are taxed on the shareholder. Directors' pay is another option. Which mix works best depends on your other income, so we plan withdrawals before the company is set up rather than afterwards.

You can, but it is rarely tax-neutral. Moving assets to a company is normally a disposal at market value for capital gains tax, and property transfers may also bring stamp duty land tax. Incorporation relief can help for a genuine property business. Many families therefore fund a FIC with new cash, or restructure carefully, rather than moving assets in the simplest way.

Yes, commonly through separate share classes. Gifting shares is a disposal at market value for capital gains tax, even though no cash changes hands, and no holdover relief is generally available for investment company shares. Dividends paid on shares given by a parent to a child under 18 are taxed on the parent above £100 a year. Adult children are taxed on their own dividends.

Usually, yes. Parents often keep voting shares and act as directors, while others hold shares that carry the growth. Keeping votes is not of itself a reservation of benefit, but benefits connected to the gift, such as new pay or a buy-back right, can be. Careful drafting of the articles and any family agreement is what makes control work and tax work together.

A FIC is a company with shareholders, so it pays corporation tax and shares can be gifted as potentially exempt transfers. A discretionary trust has trustees and no owners, and gifts into it above the nil-rate band are charged at 20%, followed by ten-yearly and exit charges of up to 6%. Many families use both, with a trust holding some growth shares.

A FIC is usually wrong when the amount is modest, when you may need the capital back, when you want to avoid public filings, or when the assets are mainly your home or a trading business that already qualifies for Business Relief. It may also be wrong if you want pension-style tax relief on contributions. We would rather tell you that on a free call than set one up.

A FIC that mainly holds investments or lets property does not qualify for Business Relief on its shares. A company that mainly owns trading subsidiaries can, subject to the £2.5m allowance for 100% relief from 6 April 2026 and the exclusion of surplus assets. That is why a FIC and a business structure need to be designed together.

A FIC must keep statutory books, file annual accounts and a confirmation statement at Companies House, file a corporation tax return, and record decisions on dividends and loans properly. Accounts are public for a limited company. Directors owe duties, even when they are family. We can coordinate with your accountant so these tasks run smoothly each year.

The specialist site goes deep on mechanics: share classes, funding, extraction and compliance. This page and our team look at the whole family picture: your will, pensions, business, trusts and residence. We have set up 50+ FICs, and Omar Aswat advises on whether one belongs in your plan. You can use both sites, and we will point you to the right guide.

Once the design is agreed, the legal incorporation of the company can be quick, but the planning takes longer. Expect time to model the numbers, draft articles and a shareholders' agreement, and agree funding, bank and investment arrangements with your other advisers. Rushing the design is the common mistake, so we agree a realistic timetable at the start.