fbpx

Search the ETC Tax Website

Request a callback

Callback Request

Please provide as much detail as possible in regards to the reason for your enquiry so our tax advisers can prepare and tailor their response to reflect your needs. We will endeavour to call you back to discuss your enquiry and you will not be charged for this time.

  • This field is for validation purposes and should be left unchanged.
  • Sign-up to our newsletter

    Newsletter Main Form

  • This field is for validation purposes and should be left unchanged.
  • Family Investment Companies

    Family Investment Companies (FICs) are increasingly becoming an alternative to the usual trust structures as a mechanism for wealth and succession planning. It is usually possible to set up a FIC without any immediate tax charges. 

    Tax efficiency

    FICs offer a tax efficient way of transferring assets out of an individual’s estate for Inheritance Tax purposes whilst retaining some control over the transferred assets.

    The right advice

    There can be flexibility around the setting up of FICs as they can be structured in a variety of ways to suit the requirements and circumstances of the family.

    A flexible approach

    A FIC offers a flexible vehicle for managing family wealth and enables the tax-efficient accumulation and distribution of profits among family members.

    More about Family Investment Companies

    FICs attempt to mirror the advantages of discretionary trusts and offer the founder a means to transfer value to other family members while still exercising an element of control. 

    There are several reasons for the popularity of FICs: 

    • Changes to the taxation of trusts made them less attractive for holding family wealth. If appropriately structured, FICs can offer similar benefits but without the restrictions applying to trusts, for example, the inheritance tax charge of 20% on contributions in excess of the trust settlor’s available nil rate band. 
    • The divergence between the rates of tax applying to individuals and trustees (up to 45%) and companies (currently 19%) has provided a further spur towards incorporation and holding family wealth with a company.

    The potential benefits of FICs extend beyond taxation:

    • The directors control the company, including its investment decisions, the timing and to whom distributions of profits are made. It is therefore not necessary for parents, for example, to retain a majority shareholding to continue to exercise control.
    • FICs can provide a measure of protection against the dissolution of family wealth on divorce. For example, the company’s articles can be drafted in such a way as to prevent the transfer of shares outside the family. Further protection against the transfer of shares outside the immediate family such as the requirement for shareholders to enter into pre-nuptial agreements could be included in a shareholder agreement. 

    Are family investment companies a replacement for trusts? 

    Trusts remain useful in the right circumstances and for many families, they remain a flexible and appropriate vehicle for the managing of their wealth. It might also be appropriate that a trust is used to hold at least some of the shares in a FIC. This can be especially attractive for creating a pot of income that might be used to provide distributions to family members who are not named shareholders of the family investment company.

    At ETC Tax, we have significant experience in advising on the creation of FICs and we work in conjunction with lawyers to put in place a tax efficient structure for you and your family. 

    Related Content

    Get in touch with us today

    Call or email us any time or, simply fill out the contact form below and a member of our team will be in touch.

    Contact Form


    Please provide as much detail as possible in regards to the reason for your enquiry so our tax advisers can prepare and tailor their response to reflect your needs. We will endeavour to - respond / call you back - to discuss your enquiry and you will not be charged for this time.

  • This field is for validation purposes and should be left unchanged.