What is a FIC?

What is a FIC and how does it work?

A Family Investment Company (FIC) can be a useful vehicle for passing wealth to the next generation while also serving as an investment vehicle in its own right.

What's more, it has potential inheritance tax, income tax and capital gains tax benefits.

As with any tax planning, it is important that your position is reviewed in the round, and in context of your long-term business and personal objectives.

A FIC is a private limited company with family members holding individual classes of shares in the FIC.
A FIC is flexible as different classes of shares can be provided to each relevant family member.
Income arising within the FIC can be distributed tax-efficiently to various share classes or can be retained in the FIC with no further tax to pay until the funds are extracted.
A FIC can allow you to pass wealth onto your children and effectively mitigate Inheritance Tax. If you hold a minority share in the FIC the value of your shares would be discounted further for Inheritance Tax purposes.
From a very long term perspective, a family trust can also hold shares in the FIC and this can be relevant to pass wealth to future grandchildren together with utilising their personal allowances.
A shareholder’s agreement can be used to dictate how the FIC is operated and how certain decisions are made within the company. This can provide an additional layer of asset protection and allow a bespoke approach based upon your family’s needs and asset protection considerations.