What is a Family Investment Company (FIC)?

A Family Investment Company (FIC) is simply a private limited company owned by you and your relatives. Instead of running a trade, it holds things like shares, rental property, or cash savings. Because the company sits between the family and the assets, it can unlock handy tax breaks and make passing wealth down the generations much smoother.

Why would I use a FIC?

• Profits inside the company pay corporation tax (currently 19% – 25%) instead of personal rates that can reach 45%. This means paying lower tax.
• Shares can be set up for varying levels of control e.g. as parents you can keep voting shares, and your children get shares that only pick up the growth.
• Handing over shares is simple and, after seven years, the value can drop out of your estate for inheritance‑tax purposes.
• Assets inside a limited company are harder to reach in a divorce or bankruptcy claim.

How do I set up a FIC?

It starts by registering a brand‑new company with Companies House and immediately tailoring its share classes. Typically, parents take the voting shares so they stay firmly in control, while children receive non‑voting “growth” shares that will collect any future upside. Once the paperwork is done, the parents usually lend cash (or occasionally transfer existing investments or property) so the FIC can get on with building a portfolio straight away.

From there the assets grow inside the corporate wrapper. Profits are taxed at 19% – 25% corporation tax and can be rolled up and reinvested year after year. When the family needs funds, money can be taken out in whichever way is most tax‑efficient at the time, paying dividends, drawing a salary, or simply repaying the parents’ original loan.

What paperwork will I need?

• Bespoke Articles to lock in those different share rights.
• A Shareholders’ Agreement which covers dividends, exits, and family disputes.
• Loan or subscription agreements for any cash you inject.
• Minutes & filings for Companies House and HMRC paperwork.

What are the common pitfalls?

Moving assets into the company can trigger Capital Gains Tax (CGT) or Stamp Duty Land Tax (SDLT), so careful planning is essential. HMRC’s close‑company rules can also bite if the FIC lends money to shareholders or their relatives, causing an unexpected tax charge. Finally, when you pay different dividend amounts to separate share classes, the paperwork must be watertight otherwise HMRC may say you are shifting income to dodge tax.

Bottom line

A Family Investment Company can be a straightforward, flexible way to grow and pass on family wealth if it’s set up correctly. With the right paperwork and ongoing care, the tax savings and control can be substantial.

If you want to find out more about how a FIC might help you, please contact us to have an initial conversation.