Introduction: What Is a Family Investment Company (FIC)?
A Family Investment Company (FIC) is one of the most powerful tools high net-worth individuals in the UK can use to pass wealth down through generations while maintaining control and minimising tax exposure. Unlike trusts—which are often complex and scrutinised—FICs offer a corporate, flexible, and tax-efficient structure to hold and grow family assets.
In this 2025 guide, we’ll walk you through how to set up a Family Investment Company in the UK, explore its benefits, highlight key legal and tax considerations, and show you how this structure compares to other estate planning strategies.
Related Reading: Best Wealth Management Firms for High Net-Worth Individuals in the UK (2025 Guide)
Why Are More UK Families Choosing FICs in 2025?
There’s a growing trend in the UK of affluent families moving away from trusts and toward FICs. Why?
- Greater control: Founders retain voting shares.
- Tax planning flexibility: Profits are taxed under corporation tax rules (25% in 2025).
- Succession benefits: Non-voting shares can be gifted to children or grandchildren.
- Asset protection: Helps ring-fence family wealth from divorce or business risk.
- Professional investment structure: Aligns with modern wealth management strategies.
Step-by-Step: How to Set Up a Family Investment Company in 2025
Step 1: Choose a Legal Structure
Most FICs are set up as private limited companies (Ltd), with a carefully drafted shareholder agreement. You’ll need:
- Memorandum and Articles of Association
- A Shareholder Agreement (detailing voting and income rights)
- Directors (often parents)
- Shareholders (usually children or family trusts)
Step 2: Inject Capital or Assets
Capital can be added through cash, property, or even existing investment portfolios. Note: large property transfers may trigger Stamp Duty Land Tax (SDLT).
Step 3: Structure Share Classes
To protect control, founders typically hold voting shares while gifting non-voting shares to children or trusts. This allows founders to retain decision-making power.
Step 4: Register With Companies House
Incorporate your company online or through a solicitor. Standard registration includes:
- Company name
- Office address
- Share capital
- PSC (People with Significant Control) registration
Step 5: Open a Business Bank Account & Start Investing
Set up a corporate bank account, connect it with a professional investment advisor, and begin asset management. The company can then invest in:
- Stocks & bonds
- Buy-to-let properties
- Private equity
- Unit trusts or ETFs
Tax Considerations for FICs in 2025
✅ Corporation Tax: As of 2025, corporate profits are taxed at 25%, which is often lower than personal income tax rates for higher earners.
✅ Inheritance Tax (IHT): Gifting non-voting shares can help reduce IHT over time, especially if gifts are made more than 7 years before death.
✅ Dividend Tax: Dividends paid from the FIC to shareholders will be subject to income tax (outside of ISAs or pension wrappers).
✅ Capital Gains Tax (CGT): The company pays CGT on asset sales, but gains are taxed under corporate rules—not personal CGT.
Always consult a tax advisor before executing a FIC plan, especially when dealing with properties or cross-border assets.
FIC vs Trusts: Which One Is Better in 2025?
| Feature | Family Investment Company | Trust |
|---|---|---|
| Control | Founders retain it | Trustees control assets |
| Tax Transparency | Company pays CT (25%) | Potential IHT, CGT, and trust income tax |
| Complexity | Medium | High |
| Flexibility | High | Medium |
| Regulatory Scrutiny | Lower | Higher |
In 2025, many advisers recommend FICs as more efficient and less heavily scrutinised compared to discretionary trusts—especially for younger families or business owners.
Common Use Cases for FICs
- Passing wealth to the next generation gradually
- Protecting assets from divorce or creditor claims
- Investing family assets in a tax-efficient structure
- Minimising Inheritance Tax over time
- Keeping voting control while reducing taxable estate
FAQs About Family Investment Companies
Q1: Is a FIC suitable for families with less than £1 million in assets?
Typically, FICs are recommended for families with £2 million+ in investable assets. For smaller estates, simpler options like ISAs or pensions may suffice.
Q2: Can I include real estate in a Family Investment Company?
Yes, but be cautious of Stamp Duty and mortgage implications. Transferring property into a company may trigger SDLT or CGT.
Q3: What happens if a shareholder dies?
Shareholder agreements should include succession terms. Shares may pass to heirs or trusts, depending on your plan.
Q4: Do I need to pay tax when gifting shares to my children?
Yes, this may be considered a Potentially Exempt Transfer (PET) for IHT purposes. Consult an adviser to structure gifts tax-efficiently.
Q5: Can a FIC be used with offshore trusts or holding companies?
Yes, but this adds complexity. FICs can integrate into global tax planning with legal guidance.
Final Thoughts: Should You Set Up a FIC in 2025?
If you’re a high net-worth individual or business-owning family in the UK, a Family Investment Company might be one of the smartest financial planning tools available in 2025. It offers a corporate approach to intergenerational wealth planning, better control, and long-term tax efficiencies.
Setting up a FIC is not just about avoiding tax—it’s about protecting and growing family wealth the right way.