Family Investment Company (FIC)
A family investment company (FIC) is a type of private company that wealthy families use to manage and invest their assets. In the UK, FICs are becoming increasingly popular for tax-efficiently passing on wealth to future generations.
What differentiates FICs from other investments?
Our in-house tax team explored how several key features differentiate FICs from other types of investment vehicles:
- Firstly, they are owned and controlled by the family rather than external investors or shareholders. This allows the family to decide how their assets are invested and managed, ensuring that the wealth remains within the family.
-
Secondly, FICs can hold a wide range of assets, including shares in other companies, property, and other investments. This flexibility makes them an attractive option for families looking to diversify their wealth and protect it from potential risks.
The Main Benefits of an FIC
One of the main benefits of using an FIC is the potential to reduce the tax paid on wealth passed down to future generations. In the UK, inheritance tax is levied on the value of an estate above a certain threshold (currently £325,000). Using an FIC, it is possible to structure the ownership and distribution of assets to minimise the amount of tax payable.
There are several other considerations to bear in mind when setting up and operating an FIC. For example, ensuring that the company is appropriately structured and governed and that any investments made are consistent with the family’s long-term goals and risk appetite is essential.
Summary
In summary, a family investment company can be a valuable tool for managing and investing family wealth in the UK, providing flexibility, control, and the potential for tax efficiency. However, it is crucial to seek professional advice and ensure that the company is set up and operated in a way that meets the family’s needs and complies with relevant laws and regulations.
Download our free Family Investment Company Guide to learn more:
