UHY Ross Brooke Chartered Accountants

Family Investment Companies

keys trusts family investment companies

We are regularly approached to advise on how families might pass on wealth to subsequent generations.

One of the strategies available is the use of gifts, which should never be dismissed. However, concerns often raised around a strategy of making gifts is that outright ownership gives the recipient immediate unfettered access to the asset or funds that are transferred, which may not be appropriate in their circumstances, for example if they are immature, frivolous, or irresponsible; or have mental health issues, addictions, or other medical problems; or might be at risk of a relationship breakdown where financial interests may come into dispute.

Often therefore the use of a Trust is a go-to recommendation. These too are not without merit in many situations.

Trusts v. Family Investment Companies

Over more recent years, as Government policy has sought to discourage the day-to-day use of trusts through increased rates of taxation and regulatory complexity, the option of using a Family Investment Company (FIC) has become more prevalent.

FICs are family-owned private companies, usually set up in the form of a UK Limited company, used to hold assets and cash for a family to invest. They are usually set up with an initial loan from parents or grandparents which is repaid over time, but the growth then sits within the Company and can be paid out to children/grandchildren or reinvested. The structure is inherently tax efficient as the UK rates of corporation tax remain lower than income tax rates.

The generally accepted regulatory environment of a company is well understood and so these structures are favoured as a means of passing on wealth in a controlled way.

Next steps

With a team of highly qualified tax advisers, we are well placed to advise on and implement a Family investment company structure, where appropriate.

Please do get in touch with Philip Kinzett-Evans or Joshua Pearce should you require assistance on this, or any other family wealth tax planning matters and we will be happy to provide you with an outline of our services and a fixed fee quote for any work you would like us to undertake.

See also Why you should consider a Family Investment Company as part of your overall strategy

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