FICs offer a sophisticated and flexible approach to wealth management, ensuring continuity and security for future generations.
FIC is a Limited company that offers an effective means for families to manage their wealth, offering benefits such as controlled asset retention, tailored investment strategies, and the ability to determine income and capital distribution among shareholders.
The structure of a FIC permits the issuance of different classes of shares, allowing families to design a bespoke arrangement that suits their unique needs. This approach provides a blend of control and economic benefit distribution, with tax advantages. Consider for Example,
A family with a substantial surplus income that is established within a FIC. The income can be managed within the FIC, which is subject to Corporation Tax (currently at a rate of 25% for investment companies and 19% below profits of £50,000), compared to personal Income Tax rates, which can be up to 45%.
When applied to trading companies, the integration of a FIC within your business structure can lead to substantial tax efficiencies.
  • Corporation Tax Relief : The fact that FICs are taxed at Corporation Tax rates, which are typically lower than personal Income Tax rates, can translate into notable tax savings.
  • Business Property Relief (BPR) : FIC shares that meet the necessary criteria can potentially secure BPR, leading to a reduction in the Inheritance Tax (IHT) payable on the shareholder’s estate upon their death.
  • Business Asset Disposal Relief (BADR) : If you are in the process of selling your business, having an established FIC could enable you to qualify for BADR, potentially reducing your Capital Gains Tax liability by 50%.
For property investment companies, the formation of a FIC can yield significant advantages, particularly in relation to Inheritance Tax (IHT):
  • Gifting and IHT : The gifting of FIC shares can potentially reduce the value of your estate for IHT purposes. If you survive for seven years after making the gift, the shares will typically fall outside of your estate for IHT purposes.
  • Control Over Assets : Even after gifting shares, it’s possible to retain control over the assets by maintaining directorship of the FIC and/or retaining a class of shares with voting rights.
  • Potential for BPR : If the FIC operates as a business (for example, property development) rather than merely holding property, it may be possible to qualify for BPR, offering further reduction in IHT liability.
Why work with us?
At UK Tax Advice and Accountancy, our commitment is to support you in achieving your financial goals while ensuring effective and efficient management of your family’s wealth. Our expertise and strategic approach to implementing FIC structures equip you with the tools and knowledge needed to maintain control over your financial future.