What is a Family Investment Company?

A Family Investment Company is a private company, set up by a company director, to protect their family wealth, hold assets and mitigate tax within HMRC rules.

  • 0% Inheritance tax on existing retained profits
  • 0% Corporation tax on investment profits
  • Loan funds back to your company
  • Invest in property or other asset classes
  • Retain business property relief
  • Lifetime legacy
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The 2023 Corporation tax changes

A Family Investment Company is a way to safeguard and grow your wealth in a tax-efficient manner, within HMRC rules, ensuring that it is protected from an extensive inheritance tax bill for your family. It is an efficient vehicle for saving tax and supporting innovative strategies, not suitable for implementation via your trading company.

A Family Investment Company is set up similarly to any other company, but with different rules applied to ensure the company invests, as opposed to trades. It is also setup to the benefit of your family, although they do not make decisions; its setup is such that you are in total control.

Various rules and strategies dictate different ways in which the company works, saving tax and supporting innovative strategies, not suitable for implementation via your trading company.

Cash or assets can be transferred to, and held within a Family Investment Company. Any profits that are made are then liable for corporation tax, as opposed to capital gains or income tax, as would otherwise be the case. This alone, creates significant tax savings when compared with those of the individual. A Family Investment Company is at its most effective as part of a Lifetime Business Tax Plan, which can radically mitigate tax.

Inheritance

For business owners, the Family Investment Company is a more appealing alternative to a traditional trust arrangement, providing extensive flexibility and inheritance tax benefits. It is a tax-efficient way to protect wealth, hold assets and pass them down through the generations. It also simplifies succession.

Control

A Family Investment Company allows you, the company director, to maintain full control. This is dictated by the way the company is set up. All decisions and control of the company are managed by you, for example paying dividends. This could be as a form of income or to other members of the Family Investment Company. Other members are not decision makers. The Family Investment Company is flexible, meaning that it can be tailored to meet your individual situation and altered with time, as necessary and as you decide.

Just some of the unique extent of a Family Investment Company…

  • Safeguard Assets
  • Ensure the family is looked after during your lifetime and beyond
  • Growth and protection of the family legacy
  • All assets and funds are still under the control of the company director
  • Funds and assets can be moved flexibly to fit individual strategies
  • Full control means changes can be made as the family changes
  • Inheritance is streamlined
  • Beneficiaries are already part of the Family Investment Company
  • Paperwork and legal wrangles and charges are avoided
  • Inheritance tax is mitigated
  • Tailored succession plans can be created
  • Changes to the family structure can be replicated within the Family Investment Company, for example due to divorce or new family members.
  • Property can be held within the Family Investment Company
  • Can be used for Buy-to-Let company formation

The Family Investment Company and Property

If you are looking at purchasing a Buy-to-Let property portfolio then a Family Investment Company is the ideal vehicle.  This puts your assets within a tax-efficient and ring-fenced environment, protecting you and your family from excessive tax implications. Business owners and their families can take advantage of property market growth, ensuring long-term advantages. This can also be coupled with a Small Self-Administered Scheme to further achieve tax efficiency, investment potential, and flexibility. Whilst you, the company director, retain control, should the worst happen you avoid leaving the extensive inheritance tax bill your family would be faced with, should you not have a Family Investment Company in place.

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