For families seeking a controlled, tax-efficient way to invest and pass on wealth and make financial provision for the next and future generations, while retaining a level of control to protect that wealth, a Family Investment Company (FIC) can be an effective solution.
At B P Collins LLP, our Corporate and Commercial team regularly advises on the formation and ongoing operation of FICs. We work closely with tax advisers to ensure the structure supports your commercial objectives and long-term family planning.
What is a Family Investment Company?
An FIC is a private company, specifically formed to hold investments for a single family.
FICs tend to work well for holding large capital sums and/or long-term investments; and producing income for shareholders.
A FIC is usually set up with bespoke constitutional documents which are tailored to meet the family’s needs.
FICs can be incorporated as limited or unlimited companies. Unlimited companies have the benefit of an exemption from filing accounts at Companies House, so that family finances can be kept a little more private. On the other hand, if a FIC holds property or engages in activities that carry a degree of risk, a limited company remains preferable to protect the shareholders.
FICs are generally funded by one founder or generation who wants to retain control whilst spreading or passing ownership rights to other generations, including to reduce the value of assets in the founder(s) estates for tax purposes.
Why consider a Family Investment Company?
FICs are increasingly popular because they offer flexibility and potential tax advantages, including:
- Control over investments
Directors (often parents or grandparents) can retain control over how funds are invested and distributed.
FICs are sometimes combined with trusts (which can hold one or more share classes) to give even more flexibility and control (including as to the identity of who can benefit from dividends and capital growth), although this can impact tax effectiveness.
- Succession and estate planning
Different share classes can be used to pass value to children or other family members while preserving voting control.
- Corporation tax treatment
Investment growth and profits within an FIC are generally subject to corporation tax, which may be more favourable than personal income tax depending on individual circumstances.
- Dividend flexibility
Dividends can be paid in a tax-efficient way tailored to each family member’s personal tax position.
- Asset protection
Assets held within the company are legally separate from personal assets, which can provide protection against personal financial risk.
Every family’s situation is different and an FIC is not suitable for everyone. Early professional advice is essential to ensure the structure meets your objectives.
How can B P Collins help?
Setting up an FIC requires careful planning and clear documentation. Our team can assist with:
- Advising on the appropriate vehicle(s), structure, and bespoke share classes
- Drafting tailored articles of association and shareholders’ agreements
- Advice on how to structure the funding of the FIC with cash and/or assets
- Incorporating the FIC and dealing with Companies House filings and statutory registers
- Advising on directors’ duties and governance arrangements
- Collaborating with your accountant or tax adviser to support your intended tax strategy
- Advising on future changes such as additional funding, succession planning or exit strategies
We take a practical, collaborative approach to ensure the structure remains suitable for the long term.
Is a Family Investment Company right for you?
If you are considering investing surplus wealth, planning for future generations, or reviewing existing wealth structures, a Family Investment Company may be worth exploring.
To discuss whether an FIC is suitable for your family, contact B P Collins LLP to speak with one of our corporate and commercial specialists by emailing enquiries@bpcollins.co.uk or call 01753 889995.
