Owner-Managed Businesses

Family investment company (FIC)

Produced by Tolley in association with Craig Simpson of Bates Weston Tax LLP
  • 23 Jun 2022 10:26

The following Owner-Managed Businesses guidance note Produced by Tolley in association with Craig Simpson of Bates Weston Tax LLP provides comprehensive and up to date tax information covering:

  • Family investment company (FIC)
  • What is a family investment company (FIC)?
  • FICs used for estate planning
  • Income tax advantages of an FIC
  • Funding an FIC
  • Funding an FIC using a loan
  • Transferring investments to the FIC
  • FICs and passing on property portfolios
  • Limited or unlimited FIC
  • Control and governance of an FIC
  • More...

Family investment company (FIC)

What is a family investment company (FIC)?

An FIC can apply to many different types of company structures used for different purposes although originally they began as estate planning vehicles. This guidance note summarises how an FIC can be a useful structure for a family business and provides links to additional sources of information. The structuring of FICs is a complex area with a lot of options on how to hold the shares, etc, therefore if an FIC structure is implemented, advice should be taken from relevant legal and tax experts.

Essentially, an FIC is simply a company that has been established with the specific purpose of meeting the needs of, usually, a single family. An FIC allows the founders of the business to retain some involvement in the company and possibly a managed income stream but also pass the investments down to their children or grandchildren. They may be favoured above trusts because they are a more familiar structure but the option of using trusts should also be considered, see the Taxation of trusts ― introduction guidance note.

The FIC is usually set up as a new company with a moderate level of share capital, eg 10,000, £1 ordinary shares to provide a reasonable capital base. Giving the family cash amounts in order to allow them to then subscribe for shares means that there are no issues of share valuation.

Investments can be in any form that a company is entitled to hold and would typically include

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