In an era of evolving UK tax legislation and complexity, Family Investment Companies (FICs) have emerged as a powerful, popular tool for high-net-worth families seeking control, flexibility, and tax efficiency of their estates.
While FICs might seem simple, knowing how they work for your family can unlock their full potential.
Here are six key ways FICs can enhance your wealth Planning:
- Tax efficiency for you and your investments
A FIC can hold your tax-producing assets instead of in your personal name, freeing up personal tax allowances to be used against other income like pensions.
Unlike personal investments taxed up to 45%, assets in a FIC are subject to corporation tax, currently up to 25%.
Investing in dividend-producing assets in a FIC can be even more beneficial, as dividends are often exempt from corporation tax, making it ideal for bespoke portfolios.
- Structured Succession Planning
FICs offer a customisable share structure, enabling founders (typically parents) to retain control via voting shares, while allocating non-voting or growth shares to children or beneficiaries.
This allows for a gradual wealth transfer without giving up decision-making authority.
Over time, gifting shares can reduce the founder’s estate for Inheritance Tax (IHT) purposes, provided they survive seven seven-year gifting period.
- Asset Protection and Risk Management
Assets held within an FIC are separate from personal holdings, which can offer protection against personal matters such as divorce.
Share classes can be designed to limit access to capital while still providing income through dividends.
- Flexibility in Investment Strategy
FICs can hold a wide range of assets: property, equities or cash.
This flexibility supports diversification, long-term growth, and alignment with family values and goals.
- Create a Post-Sale Wealth Platform
Following a business sale, many families find themselves with substantial capital but no clear structure for managing it.
A FIC can act as a purposeful holding environment, providing governance, strategy and a foundation for multi-generational wealth. For many families, it becomes the bridge from a business legacy to an investment legacy – preserving capital while creating a framework for the next stage of stewardship.
- Alternative to Trusts
Compared to trusts, FICs can often be clearer, with fewer initial taxes and more control.
They are particularly attractive considering recent changes to trust taxation and IHT reliefs.
Closing Thoughts
A Family Investment Company is not a one-size-fits-all solution. But for high net worth families – with at least £2m in investable assets – it can be a highly effective way to protect, manage and pass on wealth.
At Raymond James, Ribble Valley, we work with families to ensure their investment companies are more than just a tax wrapper. If you’d like to learn more, contact Wayne Hayhurst, our Branch Principal, to organise a complimentary conversation.
*Risk warning: With investment, your capital is at risk. The information in this blog does not constitute advice or a recommendation and you should not make any financial decisions based solely on it. If you require personalised advice, we will be happy to assist you.