An FIC is a private company, usually set up by parents, to hold family wealth (investments, property, or cash). Shares in the company are then given to children or held in trust, allowing wealth to pass down while parents keep control as directors.
Potential advantages
~Control – parents can stay in charge of investment and distribution decisions, even after gifting shares.
~Tax efficiency – companies pay corporation tax (currently lower than higher-rate income tax), which can help investments grow more efficiently.
~Succession planning – shares can be passed gradually to children, spreading inheritance tax exposure.
~Flexibility – unlike some trust structures, FICs can be adapted to changing family needs.
Potential drawbacks
~Complexity – setting up and running a company involves legal work, annual accounts, and compliance.
~Costs – professional fees can be significant, especially for families without very large estates.
~Scrutiny – HMRC has been paying closer attention to FICs, given their growing use.
~Not always necessary – for many families, simpler solutions (such as wills, pensions, and trusts) achieve the same aims with less hassle.
Who might benefit?
~Families with £5m+ of investable assets
~Parents wanting to retain control while passing value to children
~Families who value corporate-style governance and record-keeping
~For those with smaller estates, the costs and complexity often outweigh the benefits.
Bringing it together
A Family Investment Company can be powerful in the right circumstances, but it’s not a one-size-fits-all solution. For many families, simpler estate planning tools provide better value and less complexity.
Before setting one up, ask yourself: “Is this really solving a problem I have, or just something that sounds clever?”
Nic Round is a Chartered Financial Planner and Chartered Wealth Manager, authorised and regulated by the Financial Conduct Authority.