Family Investment Companies (FICs)
By Ray Best
1 September 2025
The Modern Family Office, Evolved
When it comes to securing your family's financial future, the traditional tools - trusts, direct ownership, simple inheritance - no longer offer the flexibility or efficiency many high-net-worth families need. That's where Family Investment Companies (FICs) comes in.
Over the past decade, interest in FICs has surged, and for good reason. Think of an FIC as a modern, family-run investment bank - an innovative structure that blends tax efficiency, control, and succession planning. This blog unpacks the technical elements behind FICs and their real-world benefits, while keeping the content approachable and engaging.
What is a Family Investment Company?
Imagine having a private investment company exclusively controlled and owned by your family. That's essentially what an FIC is - a limited company designed to manage and grow family wealth across generations.
Key Features:
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Shareholders: Typically include family members.
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Directors: Usually parents or older relatives overseeing the company's operations.
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Assets Held: Property, investments, cash, and other income-generating assets.
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Structure: Often uses a mix of voting (control) and non-voting (value) shares to separate decision-making from financial benefit.
Why Families Choose FICs: The Technical Edge
FICs aren't just popular because they sound smart.
They provide real, measurable benefits when it comes to tax strategy, control, and intergenerational planning.
Here's a closer look at how they work under the hood.
Tax Efficiency: Lower Corporate Tax = More to Grow
Unlike individuals, companies pay corporate tax on profits - typically 25%, but just 19% for profits under £50,000. Compare that to income tax rates of up to 45% for individuals, and it's easy to see why FICs retain more money to reinvest and grow wealth.
💡 SMART MOVE: FICs let families defer personal taxes while retaining control and growing the pot.
Control & Flexibility: Retain the Reins
In an FIC:
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Parents often hold voting shares.
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Children or beneficiaries receive non-voting shares, giving them a stake in the value without control.
This structure keeps major decisions in experienced hands while gradually introducing the next generation to wealth ownership.
Succession Planning Made Simple
A typical setup might involve:
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£1 million invested by grandparents.
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£200,000 into voting shares.
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£800,000 into non-voting shares, gifted to children.
If the transferor survives 7 years post-gift, the non-voting shares fall outside their estate - potentially saving 40% inheritance tax on that amount.
Potential Challenges: What to Watch Out For
FICs are powerful, but they're not plug-and-play. Here's what to keep in mind:
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Setup & Running Costs - You'll need legal advice, custom articles of association, formal share structures, accounting services, and compliance management. The costs can add up - but with the right assets and scale, the benefits usually outweigh them.
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Tax Risks - Though a recent HMRC report found no widespread abuse of FICs for tax avoidance, tax rules can change. Staying informed and compliant is essential.
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Administration - Running a company means maintaining accurate records, submitting filings, and managing roles. Poor documentation or unclear share structures can cause major issues later.
Practical Applications: Is an FIC Right for You?
If you answered 'YES' to any of the following, it's time to speak with us:
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Do you own multiple properties or a significant investment portfolio?
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Are you concerned about Inheritance Tax?
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Do you want to involve your children in your wealth - but on your terms?
If so, an FIC could be a fit. Many families use them for property portfolios, private equity investments, and wealth preservation across generations.
Step-by-Step: How to Set Up an FIC
Here's what the typical process looks like:
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Define Your Goals - Usually tax efficiency and wealth transfer.
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Get Expert Advice - Structure, legal, tax planning and governance.
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Incorporate the Company - With custom articles of association.
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Allocate Shares - Design voting and non-voting structures.
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Set Up Operations - Bank account, roles, and financial control.
🕰️ TIMELINE: Most FICs take 4 - 8 weeks to set up, longer for complex scenarios.
In the right hands, a Family Investment Company can be a game-changing tool for managing wealth. You get:
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Better Tax Efficiency
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Long-Term Control
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Structured Succession Planning
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A Flexible Alternative to Trusts and Partnerships
But as with any powerful tool, the key lies in proper setup, management, and advice.
Family wealth planning is evolving. With tax laws and estate planning becoming increasingly complex, FICs offer a modern, structured approach that balances control with opportunity.
If you're considering your next step in safeguarding your family's future, a Family Investment Company might just be the most efficient and empowering option available.
At Wills, Tax & Trusts Ltd., our Managing Director, Ray Best, has extensive expertise to help you develop tailored strategies that reduce your IHT liability, protect your family assets, and ensure a smooth transition to the next generation.
Contact us today to arrange a consultation and take the next step in securing your family's future.