Family Investment Company: How to's

Family Investment Company: How to's

If your family owns a business and you have a large estate, there are different inheritance tax (IHT) planning strategies that can be tailored to meet your specific needs and circumstances.

The key is to work with a qualified adviser who can provide expert guidance on the best strategies for your situation.

If you want to manage your family's wealth and take advantage of some significant tax benefits, then a Family Investment Company (FIC) might be the way to go.

Essentially, an FIC is a private company that you can use to hold and manage your family's wealth, and it can be a great way to ensure that your family's money is passed down from generation to generation.

The main benefit of an FIC is that it allows you to pass on shares to your family members in a tax-efficient way.

This is because, unlike other types of shares, those in an FIC are exempt from inheritance tax. What's more, FICs also offer the potential to pay dividends at a lower tax rate than income tax.

If you're interested in setting up an FIC, the process is relatively straightforward.

Here are the steps you'll need to take:

  1. Choose a name for your FIC, and make sure it's available to use.
  2. Decide on the structure of your FIC and how many shares you want to issue.
  3. Draft your articles of association, which will outline the rules and regulations of your FIC.
  4. Incorporate your FIC with Companies House and register for Corporation Tax.
  5. Transfer your assets into your FIC, such as property, investments or cash.
  6. Issue shares to your family members.
  7. Appoint directors and decide on the management structure of your FIC.
  8. Keep accurate records and file annual accounts with Companies House.

These complex estate planning strategies require a qualified professional.  

Speak to an expert if this is something you're keen to learn more about. Tell them about your situation. Don't be afraid to be direct (they'll thank you for it!) and explain what you're trying to achieve so they can determine the best strategy for your individual needs and circumstances.