Family Investment Companies

Family investment companies (FIC) are becoming a very popular and flexible alternative to trusts which enable wealth to be passed to future generations in a tax efficient manner.  Significant inheritance tax and income tax savings can be made across the family, with control over the assets retained by the directors meaning there is no need to hold a majority shareholding in the company.

What is a family investment company?

Very simply, a family investment company is a private limited company which holds investments such as stocks, shares and property. The shareholders are spread across the family meaning wealth is passed down to chosen family members with the ability for income to be paid as determined by the directors.

Key advantages

These include:-

  • 40% inheritance tax saving on investment after 7 years
  • Additional inheritance tax saving for the family due to minority holding discount on the value of their shares
  • Income taxed at 19% in a company (reducing to 17% in April 2020) compared to personal tax rates that can be as high as 60%
  • Most dividends received in a company are tax free
  • Management and control of investments retained by directors, not shareholders
  • Income can be paid out as determined by directors
  • Flexible
  • Future growth outside of settlors estate
  • Unlike trusts, there is no lifetime inheritance tax charges

How can assets be placed into a family investment company?

Assets can be passed into a family investment company by either an issue of shares, a loan of cash or by transferring assets into the company.  There are different implications of each of these methods which need to be considered from the outset, which we would be happy to discuss with you.

If you would like to find out how you can benefit from a family investment company, please contact Kirk Vaughan using the contact details below.

kirk@knightslowe.co.uk

Eldo House, Kempson Way, Suffolk Business Park,
Bury St Edmunds, Suffolk, IP32 7AR

Tel:  01284 701 300         Fax:  01284 752 800