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UK Wealth Structuring

Family Investment Companies

Family Investment Companies (FICs) are private limited companies set up to hold family assets. They are becoming an increasingly popular part of wealth structuring and can provide an efficient alternative to traditional planning options.

Some of the benefits of FICs include:

  • Tax-efficient – as companies they are taxed differently to individuals and trusts
  • More control – over how assets are distributed among family members and what happens in cases such as divorce
  • Flexible about types of assets they can hold – for example, most types of real estate and also liquid investments, including assets held outside the UK

FICs are often attractive to business owners and entrepreneurs who are already familiar with company structures. They can be useful for any family with wealth to invest, however, and are increasingly being used as a way to protect, give away, and grow assets in a structured way.

Our solicitors can advise on whether an FIC is right for you and your family’s wealth. We’ll work with you to create a structure that is tailored to your needs and protects your assets against future risks or changes in the family.

Our multi-disciplinary team is highly specialised and experienced. We’re experts not just in tax and wealth planning, but also in corporate law, which is vital for making FICs work effectively. Our real estate team can deal with any property transactions.

Call us today on 0370 1500 100 – or use our online form and we’ll call you back.

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More Information - Family Investment Companies
    • How Do FICs Work?
    • An FIC is usually set up by a ‘founder’ who creates at least two classes of shares:

      • The founder’s shares carry voting rights but no rights to capital or income
      • Non-voting shares are then given to family members, who have a right to capital and income but no control over the company.

      The founder is usually also the director of the FIC. The non-voting shareholders can’t make decisions about investment strategy or the issue of dividends, but they can benefit financially. The value of company assets can be removed from the founder’s estate for inheritance tax purposes.

      Non-voting shareholders can be given voting shares later on if this is appropriate (e.g. once minor children become adults), and may be appointed as a director of the company by the founder.

      It’s important to draft bespoke articles of association and shareholders’ agreements to regulate which family members can make decisions, and what happens when the shareholders die or when other events occur.

    • What Are The Tax Benefits Of A Family Investment Company?
    • The government has said it wants to reduce corporation tax to 17% by 2020 – this means the company structure can be beneficial to many wealth holders.

      Some of the tax benefits of an FIC include:

      • Most dividends paid to the FIC are exempt from corporation tax, regardless of whether the dividend has a UK or overseas source
      • In many cases there’s no tax charge for setting up an FIC
      • Transfer of company shares to shareholders (family members) count as a gift and are therefore potentially exempt from inheritance tax
      • Shareholders won’t be taxed on the first £2,000 of dividends that they receive in a tax year.

      Our tax experts are able to advise whether an FIC is the most tax-efficient option for your estate and circumstances.

    • Are There Any Risks?
    • FICs won’t be suitable for everyone. Some things to be aware of include:

      • Some transfers may incur capital gains tax or stamp duty land tax
      • Assets may be subject to both corporation tax (as company profit) and income tax (as dividends)
      • You (as the company founder) could be taxed for any dividends paid to your children if they are still minors
      • Information about the company and its owner must be publically available.

      Our solicitors work closely with you to determine whether a company structure is right for your situation and fits in with your plans for succession and the rest of your estate.

    • Do I Need To Make A New Will?
    • Not necessarily, since your shares as a founder will form part of your estate and pass on to your beneficiaries according to the terms of your existing Will.

      However, we do recommend reviewing your Will regularly, especially if setting up a new wealth-holding structure like an FIC. This will ensure your estate is still set up in the most tax efficient way and give you peace of mind that after your assets will be passed on in the way you want after your death.

      Call us to discuss your estate planning needs on 0370 1500 100 – or use our online form and we’ll call you back.

    • Meet The Team
    • Our partner-led team comprises experts in tax, trusts, and wealth structuring. We also have teams in real estate and corporate law, which means we can offer everything you need for your FIC in-house.

      We have considerable experience advising on the wealth structuring options for complex estates and frequently work with international and high net worth clients. Whatever your needs, we have the expertise to help you plan effectively

      Meet the team

Irwin Mitchell are a very professional, trustworthy and straightforward company to deal with. I would recommend them to anyone."

Frank Clayton, client

Frequently Asked Questions

Does Inheritance Tax Apply to FICs?

FICs can avoid inheritance tax provided certain conditions are fulfilled:

  • When you set up the company, subscriptions for shares must be paid in cash
  • You give the shareholders their shares at least seven years before you die.

The gift of shares is subject to the seven-year rule for inheritance tax purposes.

If you (as the founder) keep a minority interest in the company, the value of your shares will be taken into account on your death and potentially incur inheritance tax. However, the value of these shares can often be presented as negligible, since you can’t sell them and you’re not entitled to profits from the company.

Call us for more information on 0370 1500 100 – or use our online form.

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What Happens If Someone Dies Or Divorces?

Because FICs are companies, this means there’s greater control in how the wealth is protected.

If you’re concerned about wealth passing out of the family, we can include terms in the company documents that restrict the onward transfer of shares. This means the shares may not be part of any divorce settlement, or subject to any financial claim against a shareholder’s estate in years to come.

We can also help you draft terms for what would happen to shares if you or a shareholder died.

If used effectively, FICs can offer a highly tailored level of control to suit you and your family not only now, but also in the future.

Call us today on 0370 1500 100 for more information – or use our online form and we’ll call you back.

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What Taxes Are Trusts Subject To That FICs Aren’t?

The taxation of trusts has changed significantly in the last 12 years and this means FICs are becoming increasingly popular part of wealth structuring and estate planning.

Some of the taxes a trust may be subject to include:

  • The ‘Relevant property regime’ – this includes a 20% inheritance tax charge on any property transfers over £325,000 for new trusts
  • Inheritance tax charged every ten years
  • “Exit charges” – when capital leaves a trust.

Call us today on 0370 1500 100 for more information – or use our online form and we’ll call you back.

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