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Family Investment Companies
A family investment company (FIC) is a UK-resident private limited company with family members as shareholders. FICs can be used as a tax-efficient method to transfer significant sums of cash into a company and so pass on family wealth to the next generation without an immediate charge to Inheritance Tax (IHT).
Many entrepreneurs and business owners are attracted to FICs, but they can be useful for any family who wants to invest their wealth and grow their assets, while simultaneously protecting their beneficiaries from avoidable IHT. Investing via an FIC can also achieve very attractive Income Tax and Capital Gains Tax savings in the medium to long term.
Our highly-specialised team of solicitors is ready to guide you through the process of using an FIC as part of your wealth protection strategy.
How JMW Can Help
There are advantages and disadvantages to the creation of an FIC, and our lawyers have the depth of knowledge to discuss these with you in detail without inhibition or jargon to ensure you receive the very best advice for your specific circumstances.
We regularly consult with accountants, investment managers and financial advisers to bring you the very latest advice and make sure you are fully informed in making the right decision for you and your family. We operate on a collaborative basis, liaising with tax advisers to deliver a holistic approach to advising our clients.
Several of our lawyers are members of the highly-respected Society of Trust and Estate Practitioners (STEP) and our client base includes media personalities, sports professionals, entrepreneurs, business leaders and landowners.
Pros and Cons of an FIC
The benefits of an FIC include:
- Cash transfers into the company are tax-free
- No upfront Inheritance Tax charges
- Tax efficient accumulation of profits
- Control over investment decisions
- Wealth preservation for future generations
The risks of an FIC include:
- Non-cash assets transferred into the FIC may incur a capital gains tax charge
- A trust may be more tax efficient in some circumstances
- There is the potential for profits to become liable for double taxation: the initial corporation tax and the additional income tax upon distribution (and hence an FIC should be considered a medium-to-long-term investment)
- The FIC will have to comply with company filing regulations, which incurs additional costs