A General Guide to Family Investment Companies (FICs)
Family Investment Companies (FICs) have become an increasingly popular way for families to manage and pass on wealth in a structured, tax-efficient manner. They offer flexibility, control and protection when planning for future generations. This guide explains what FICs are, how they work and the key benefits and risks to consider before setting one up.
What are Family Investment Companies (FICs)?
A lot of people have a FIC without realising it. A FIC is simply a company where family members are shareholders. In some cases, trusts can also hold shares, provided by beneficiaries of such trusts and family members.
Why use a trust as a shareholder instead of children directly?
- Trustees of the trust control the rights attached to the shares, so if the shares have voting rights the trustees vote not the children who are the beneficiaries
- Assets in trust have a layer of protection if a child is getting divorced, whereas shares held in a child’s own name would not be protected from a divorce process
- Trustees can decide at what stage the beneficiaries benefit from the assets in the trust, and which beneficiaries.
Benefits and risks of FICs
- FICs allow for the transfer of wealth to future generations within a family.
- A FIC can have different classes of shares, which have different rights attached relating to income, capital and voting rights.
- Avoid excessive alphabet classes– HMRC may query this
- Changing share rights can trigger value-shifting implications
- It is easier to put in real properties that have been in a property partnership or have been run as a business
- Consider evidence as to whether there has been a partnership/business
- If there has not been a partnership or business then consider a partnership for three years before then incorporating a company and seeking incorporation relief
- There is better mortgage interest relief on properties in companies compared to being owned by individuals
- Risks of CGT and SDLT
- Incorporation Relief for CGT on transfer in of whole of business in exchange for shares
- No SDLT on transfer in of properties which have been in a partnership
- Risks of Annual Tax on Enveloped Dwellings (ATED)
- Those setting up the FIC can keep control through shareholders’ agreements and articles of association
- It is important that wills and trust documents match with intentions of the FIC
Funding the FIC: loan or gift?
- Assets can be transferred in by way of a loan or in exchange for shares or as a gift
- Shares can be gifted to other beneficiaries
- Income generated by the FIC can repay loans.
- The benefit of the loan can also be gifted
This information is intended for general informational purposes only and does not constitute legal advice. We recommend seeking professional advice before taking any action on the information provided.
If you would like to discuss your specific circumstances, please contact Mihiri Gajraj ([email protected] / 023 80820 544) or Lucy Gleisner ([email protected] / 023 8082 0539).
December 2025
