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Family investment companies · Chartered Tax Advisers

Keep control today. Pass on the growth.

Every family investment company we set up starts with a blank piece of paper: designed around your family, to pass wealth to the next generation tax-efficiently and help keep it in the family.

We respond the same working day.

Parentsfreezer shares · votes · loanFamily Investment Codesigned around your familyChildrengrowth sharesFamily trustgrowth sharesShares & fundsdividends mostly exemptPropertylet to tenantsCash & bondsfor incomegrowth passes onControl stays with youGrowth outside your estateWealth kept in the familyONE STRUCTURE · TWO GENERATIONS · NO TEMPLATE
  • 50+

    family investment companies set up

  • £100m+

    estimated inheritance tax saved for clients

  • 15+

    years' experience

  • Same day

    We respond the same working day.

Designed around your family

We start with a blank piece of paper.

There is no off-the-shelf family investment company. Each one we design starts from your wishes, your family's dynamics and your objectives, and the share classes, funding, any trust and the protections follow from those. We set up FICs from around £1m to £50m.

  • What do you want for your family?

    Who should benefit, when, and how much say each generation should have.

  • How does your family work?

    Ages, marriages, children still to come, and who might one day run things.

  • What's going in, and how?

    Cash, sale proceeds, a portfolio or property: lent, gifted or transferred, case by case.

  • What do you need back?

    Income now, capital later, and how much control you want to keep.

Why a family investment company?

Give the growth away. Keep the say.

A family investment company is a private company that holds the family's investments. The shares are split so the older generation keeps control and the younger generation owns the future growth.

  • Pass on the growth, not just the money

    Future growth in the investments can build up in your children's shares, outside your estate for inheritance tax, from the day the company starts.

  • Keep control

    You can hold the votes and sit as directors, so you decide how the money is invested and when dividends are paid, while your children own the growth.

  • Get your money back tax-free

    Funding the company with a loan means repayments are your own money coming back, not income. Many families use them as a tax-free income stream.

  • Reinvest more of the return

    Most dividends a company receives are exempt from corporation tax, and other profits are taxed at up to 25%, rather than at personal rates of up to 45%.

  • Direct income where it's needed

    Separate classes of shares let the directors pay different dividends to different family members, for example to adult children with lower incomes.

  • Help keep the wealth in the family

    The articles, a shareholders' agreement and a family trust can help keep shares in the family if a child divorces or runs into financial trouble.

When a family investment company isn't right

We'll tell you on the first call if a FIC doesn't fit. Typical reasons:

  • The sum is small, so the set-up and running costs outweigh the benefit.
  • You need the money as income now, beyond what loan repayments can provide.
  • There isn't time for growth to build up before it's needed.
  • The assets would qualify for Business Relief if you kept them: FIC shares generally don't.
  • Moving existing assets in would cost too much capital gains tax or stamp duty land tax.

Our approach: the blended FIC

A company and a trust, working together.

We often blend the two. Freezer shares with the votes for the older generation; growth shares, in separate classes, for the children and for a discretionary trust for the wider family.

Parents / grandparentsA freezer shares · votes · loanChildrenB and C growth sharesDiscretionary trustD growth shares · trusteesfor grandchildren andfuture generationscontrolFamily Investment Co Ltdalphabet shares: A, B, C and Dloan in, repaid tax-freeValue frozen: parents' A sharesGrowth: B, C and D sharesDividends: declared class by classShares and fundsPropertyCash and bondsGrowth in value passes to the B, C and D shares, outside the older generation's estates
  1. 1Parents or grandparents fund the company, usually by loan, and hold freezer shares with the votes.
  2. 2Growth shares in separate classes go to the children and to a discretionary trust.
  3. 3Dividends are directed class by class; the growth builds up outside the older generation's estates.
  4. 4The trust keeps options open for grandchildren and future needs, under the trustees' control.
The blended family investment company. Our usual approach blends a company with a trust. The older generation hold freezer shares, whose value is fixed at today's level, usually with the votes, so they keep control. Separate classes of growth shares are held by the children and by a discretionary trust for the wider family, including generations not yet born. Each class can receive its own dividends, and the future growth sits outside the older generation's estates. The trust brings its own inheritance tax regime and the share values need careful design, so this is planned case by case. Parents and grandparents Family investment company Children and grandchildren Discretionary trust Investments and assets

Why blend

  • Control stays with you

    Parents or grandparents hold freezer shares with the votes, and usually sit on the board.

  • Growth leaves your estate

    The value of the freezer shares is fixed at today's level; future growth builds up in the growth shares.

  • Flexibility for generations to come

    A discretionary trust holding growth shares can benefit grandchildren, including those not yet born, as needs change.

  • Dividends directed by class

    Each family branch, and the trust, holds its own class of share, so income can go where it's needed.

The trade-offs

A blended structure needs careful design. The main points we plan around:

  • Shares or cash put into the trust are within the trust inheritance tax regime: a 20% charge on anything above the nil-rate band going in, and charges of up to 6% every ten years and when assets leave.
  • If the parents can benefit from the trust, it is settlor-interested, which changes how its income and gains are taxed and can undo the inheritance tax benefit.
  • Income from shares or trusts a parent provides for their own children under 18 is normally taxed on the parent above £100 a year.
  • Freezer and growth shares must be valued and their rights drafted carefully, or value can shift back into the estate.

More on the blended FIC

How it works

The parents fund it and run it. The children own the growth.

Parentsdirectors · A voting sharesChildrenB, C and D growth sharesA sharesgrowth sharesFamily Investment Co Ltdthe family's own companyloan: cash ingrowth builds in their sharesShares and fundsdividends mostly exemptPropertyrent taxed at 25%Cash and bondsinterest taxed at 25%
  1. 1The parents form the company and lend it cash (or subscribe for shares). The loan stays in their estate at face value.
  2. 2The company invests. Interest, rent and gains are taxed at 25%; most dividends it receives are exempt.
  3. 3Growth accrues to the children's shares, outside the parents' estates, while the parents keep control.
How a family investment company works. The parents set up a private company and fund it, usually by lending it cash. They hold voting shares and run it as directors; the children hold separate classes of shares that carry the future growth. The company invests, pays corporation tax on its income and gains, and most dividends it receives from shares are exempt. As the investments grow, the growth builds up in the children's shares, outside the parents' estates for inheritance tax. Parents and grandparents Family investment company Children and grandchildren Investments and assets

Alphabet shares: a class for each part of the family.

Separate classes of shares carry different rights to votes, dividends and growth, set out in the company's articles.

Family Investment Co Ltdarticles set each class's rightsA sharesheld by the parents✓ Votes✓ Own dividends– Value frozenB sharesheld by child 1– No votes✓ Own dividends✓ Capital growthC sharesheld by child 2– No votes✓ Own dividends✓ Capital growthD sharesheld by child 3– No votes✓ Own dividends✓ Capital growthA typical design: the rights of each class are tailored to the family
Alphabet shares in a family investment company. A common design gives the parents A shares with the votes but little or no right to future growth, and gives each child a separate class of non-voting growth shares. Because each class is separate, the directors can declare a different dividend on each one, so income can go to the family members who need it. The exact rights are set in the articles of association and need care: dividend rights, the settlements rules and the value of each class all affect the tax. Parents and grandparents Family investment company Children and grandchildren

Share classes and alphabet shares

Parents: £1m loan, frozenChildren: all the growthTodayYear 10Year 20£1m£2.65mWithout a FICAll £2.65m in the parents' estateWith a FIC£1m in the estate; the growth is notInheritance tax saved40% of £1.65m = £0.66m
Freezing the value in the parents' estate. With a family investment company, the value the parents keep is fixed: the loan they made and any freezer shares stay at today's level. All the future growth belongs to the children's shares, outside the parents' estates. Illustration: £1m invested at 5% a year for 20 years, before tax, with the loan left outstanding. The inheritance tax figure assumes the nil-rate bands are used by the rest of the estate. Parents' value: frozen Children's value: the growth

Freezer shares and growth shares

Setting up a family investment company

Protecting generational wealth

Not just tax: helping keep it in the family.

We design for protection as well as tax. The aim is to reduce the risk of family wealth leaving the family if a child divorces, is made bankrupt or falls out with the rest of the family.

No structure can guarantee protection. Family courts can take interests in a company or a trust into account, and insolvency rules have their own reach, so the structure works best alongside good legal advice for each family member.

Protecting family wealth

  • Shares held through a family trust

    Growth shares held by trustees, rather than outright, are one step removed from an individual's own assets.

  • Articles that restrict transfers

    Pre-emption rights, and compulsory transfer if a shareholder divorces or is made bankrupt, help keep shares in the family.

  • Non-voting growth shares

    The children share in the growth without being able to control the company or force a payout.

  • The older generation in control

    Votes and board seats stay with the parents or grandparents until they choose to hand over.

  • A shareholders' agreement

    Sets out what happens on a death, a divorce, a fall-out or a wish to leave.

  • Pre-nuptial agreements

    We encourage the children to consider them, alongside the structure.

Who it's for

Different starting points, the same aim.

Accountants, IFAs and solicitors

Bring in a Chartered Tax Adviser for the structure and the tax. We work alongside you, the investment manager and the family's solicitor; your client stays your client.

Structure library

How the money goes in, grows and comes back out.

Parentslend £1mFIC Ltdinvests the moneyloan inrepaid tax-freeThe loan stays in the estateat face value: it doesn't grow£1.0mStart£0.98mYear 3£0.95mYear 6£0.92mYear 9£0.89mYear 12£0.84mYear 15Value of the FIC's investments
Funding a family investment company with a loan. Lending cash to the company, rather than giving it, means there is no gift for inheritance tax: the loan stays in the parents' estate at its face value and never grows. The company repays it in instalments whenever the parents want income, and the repayments are tax-free because they are a return of the parents' own money. Meanwhile the growth on the investments belongs to the children's shares. Illustration: £1m lent and repaid in equal instalments over 15 years, with the investments growing at 6% a year after tax. Loan still owed to the parents (in their estate) Value belonging to the children's shares

Compare the options

A family investment company, a trust, or investing personally?

Each has its place, and our blended approach uses the first two together. A simplified comparison for 2026/27:

A family investment company, a discretionary trust and investing personally compared
FeatureFamily investment companyDiscretionary trustInvesting personally
Inheritance tax on the way inNone on a loan; gifts of shares to individuals are PETs20% on anything above the nil-rate bandNot applicable
Growth outside your estateYes, in the children's sharesYes, while held in the trustNo: all of it stays in your estate
Ongoing inheritance taxNone on the company itselfUp to 6% every ten years, and on exits40% on death above the nil-rate bands
Tax on the investment returnCorporation tax up to 25%; most dividends received exemptTrust rates: 45%, or 39.35% on dividendsYour own rates: up to 45%, 39.35% on dividends, 24% on gains
Getting money outLoan repayments tax-free; dividends taxed on the shareholderAt the trustees' discretionAlready yours
ControlThrough voting shares and the boardWith the trusteesComplete
Flexibility over who benefitsFixed by who holds the sharesHigh: trustees decideComplete, during your lifetime
FAMILY INVESTMENT COMPANYParentsdirectors, votesChildrengrowth sharesFIC Ltda companyInvestments✓No entry charge when funded by a loan✓No ten-yearly or exit charges✓Parents control it through the shares!Corporation tax at 25%; tax again on payoutsDISCRETIONARY TRUSTSettlorsusually the parentsBeneficiariesat trustees' choiceTrusteeshold the assets on trustInvestments✓Flexible: trustees choose who benefits!20% entry charge above the nil-rate band!Up to 6% every ten years, and exit charges!Trust income tax at 45% (dividends 39.35%)
A family investment company and a discretionary trust, side by side. Both can hold investments for the next generation outside the parents' estates. A trust is more flexible about who benefits, but transfers into it above the nil-rate band face a 20% lifetime inheritance tax charge, with charges of up to 6% every ten years and when assets leave. A family investment company funded by a loan has no entry or periodic charges, and the parents keep control through the share rights and the articles, but it pays corporation tax and its shares are fixed to the people who hold them. Parents and grandparents Family investment company Children and grandchildren Discretionary trust Investments and assets

Family investment company vs trust

How we work

Designed with you, set up properly, kept under review.

Advice led by a Chartered Tax Adviser (CTA), with 15+ years' experience and 50+ family investment companies set up. We work alongside your accountant, solicitor and investment manager.

How we work
  1. 1

    A free call, the same working day

    Tell us about your family, what you have and what you want to achieve. A senior adviser responds the same working day.

  2. 2

    A blank piece of paper

    We design the structure around your family: share classes, funding, any trust, and the protections you want. If a FIC isn't right for you, we'll say so.

  3. 3

    A quote on request

    A clear recommendation, and a quote for the work once we understand your family and what you want to achieve.

  4. 4

    We put it in place

    The company, articles, shareholders' agreement, loan agreement and any trust deed, drafted by our in-house legal team or with your own solicitor.

  5. 5

    We stay with you

    Annual reviews, dividend and loan repayment planning, and further gifts of shares as the family grows.

Accountants, IFAs and solicitors.

When a client asks “should we set up a family investment company?”, bring in a Chartered Tax Adviser. We design the structure and handle the tax; your client stays your client.

For introducers

FAQs

Family investment company questions, answered

What is a family investment company?

A family investment company (FIC) is an ordinary private limited company set up to hold a family's investments, such as cash, shares, funds and sometimes property. The parents usually fund it mainly by lending money, and keep control through voting shares, while children or other family members hold shares that take the future growth. It is a planning structure, not a special legal form, and it is taxed as a company.

How does a family investment company work?

The parents form a company and put money in, usually as a loan with a small amount as share capital. The company invests the money. The articles create different classes of shares, so the parents can keep control while growth and dividends go to the children's shares. Profits are taxed in the company, and money comes back out as loan repayments, dividends or, for genuine work, salary. The detail is built around the family's own aims.

Who is a family investment company for?

Mainly families with substantial funds they do not need to spend, who want future growth to build up outside the parents' estate while keeping control. Typical clients are business owners with surplus cash or sale proceeds, often in a holding company, property investors passing a portfolio on, and wealthy families planning for inheritance tax. Advisers also use it for clients in those positions. It is rarely worth the cost for smaller sums.

How is a family investment company funded?

Usually by a loan from the parents, with a modest amount subscribed for shares. A loan can be repaid to the parents tax-free, so it keeps access to the capital, but it stays in their estate at face value. Funding by a gift of cash to the company is possible but has different inheritance tax consequences, so it is usually used for smaller amounts. The best mix depends on how much access to capital the parents want.

What are share classes in a family investment company?

They are different classes of shares, often labelled A, B, C and D, each with its own rights. Typically the parents hold the A shares, which carry the votes. The B, C and D shares, held by children or other family members, have no votes but take the growth, and the directors can choose which class receives a dividend. This lets one company give different family members different treatment without separate structures.

How does a family investment company save inheritance tax?

It does not remove inheritance tax on the original money. Where the parents lend it, the loan stays in their estate. The saving is on the growth: investment returns build up in the company and belong mainly to the children's shares, so they are outside the parents' estate. Gifts of shares are generally potentially exempt transfers, free of tax if the donor survives seven years. A gift of cash to the company is generally a chargeable lifetime transfer instead.

How much corporation tax does a family investment company pay?

Usually 25%. A family investment company holding shares, funds and cash is normally a close investment-holding company, which cannot use the 19% small profits rate or marginal relief. One that exists mainly to let property to unconnected tenants is not, so it can use the lower rates. Most dividends the company receives from UK and overseas companies are exempt. Interest, rent and chargeable gains are taxed.

How do you get money out of a family investment company?

There are three main routes. Loan repayments to the parents are tax-free, as it is their own capital coming back. Dividends to shareholders are taxed on the recipient at 10.75%, 35.75% or 39.35% for 2026/27, after the £500 dividend allowance. Salary is only for real work done for the company, and is rarely the main route. Taking money out in a tax-efficient order, with the loan first, is a central part of the planning.

How does a family investment company compare with a trust?

A family investment company avoids the 20% lifetime inheritance tax entry charge that can apply to gifts into a discretionary trust above the nil-rate band, and the 10-year anniversary and exit charges under the relevant property regime. It also gives parents control through voting shares. A trust offers different flexibility, for example in who benefits and when, and can be simpler on gains. The right choice depends on the family's priorities.

Is a family investment company better than investing personally?

Often yes for larger sums that are not needed for living costs, because a company pays 25% on interest and gains and most dividends are exempt, against up to 45% on interest, 39.35% on dividends and 24% on gains for an additional rate taxpayer. But tax is due again when money leaves the company, and there are running costs. Our FIC vs personal investing calculator gives a rough comparison of the two.

How much money do you need for a family investment company?

It depends on the family's circumstances, and there is no fixed minimum. The company has to cover set-up costs and ongoing accounts and filings, and the benefit grows with the amount invested and the time it is left to grow. As a conservative guide, it tends to be considered where the sum is substantial and not needed for living costs. A free call is the best way to test whether it is worthwhile for you.

Can children under 18 own shares in a family investment company?

Yes, a minor can hold shares, though in practice they are often held for the child by a trust or by the parents as trustees. The settlements rules matter: where a parent gifts shares to an unmarried child under 18, dividend income above £100 a year from that gift is taxed on the parent, which undermines the benefit. Gifts from grandparents or others are not caught in the same way.

Can I put property into a family investment company?

You can, but moving existing property in is a disposal at market value. That means capital gains tax for you on any gain and, for a UK property, stamp duty land tax payable by the company on the market value. Because of that cost, it is often better to buy new property through the company, or to use cash. Property inside a company also has different financing and tax features, so it needs separate advice.

Can I use business sale proceeds or a holding company with a family investment company?

Yes, this is a common route. After selling a business, the proceeds can be lent to the family investment company so future growth builds up outside the estate. A holding company can also lend to or invest in a family investment company, or the family company can sit above a group in a restructure. The route chosen affects tax on the sale and on extraction, so it should be planned before completion.

How much control do I keep over a family investment company?

A great deal. The parents are usually the directors and hold the voting A shares, so they decide what the company invests in and whether and when to pay dividends, while children hold non-voting shares. The articles and a shareholders' agreement can set out what the children can and cannot do. The company is also run by directors under company law, so those duties apply from day one.

Can a family investment company help protect wealth if a child divorces or is made bankrupt?

It can help reduce the risk, but nothing can guarantee it. We design for protection as well as tax: growth shares held through a family trust, articles with pre-emption rights and compulsory transfer on divorce or bankruptcy, non-voting shares, the older generation in control, and a shareholders' agreement. We also encourage pre-nuptial agreements. Family courts can still take interests in a company or trust into account, and insolvency rules have their own reach.

Does HMRC look closely at family investment companies?

HMRC set up a small team in 2019 to look at family investment companies. It was disbanded in 2021, and HMRC was reported to have found no evidence of a link between setting up a FIC and non-compliance. FICs are now handled like any other company. Well-designed structures that respect the settlements rules, the gift with reservation rules and proper documentation are a normal part of family wealth planning.

What is a blended family investment company?

It is our usual approach: a family investment company with a discretionary trust as one of its shareholders. The older generation hold freezer shares, usually with the votes, so their value is fixed and they keep control. Growth shares in separate classes go to the children and to the trust, which can benefit grandchildren and future generations. The trust brings its own inheritance tax charges, so the design and share values need care.

Why would a discretionary trust hold shares in a family investment company?

A trust adds flexibility the company alone lacks. Shares held by trustees can benefit whichever family members need help later, including grandchildren not yet born, and are one step removed from any one person's own assets. The cost is the trust inheritance tax regime: a 20% charge on value above the nil-rate band going in, and charges of up to 6% every ten years and on exits. The settlor should not be able to benefit.

Do you use a standard family investment company template?

No. Every family investment company we set up starts with a blank piece of paper. We begin with what the family wants, how it works and what it needs back, then design the share classes, funding, any trust, the articles and the shareholders' agreement around that. Funding is often a mix of loans, gifts and transfers of assets, and the legal documents are drafted by our in-house legal team or with the family's own solicitor.

When is a family investment company not the right choice?

When the sums are small, because the costs outweigh the benefit. When you need the money for income now, since access is limited to loan repayments and dividends. When life expectancy is short, since the growth benefit needs time. And when you want assets to qualify for inheritance tax Business Relief, since family investment company shares are generally investment shares and do not. Other structures may then suit you better.

Talk to a family investment company specialist

On a free first call, a Chartered Tax Adviser will look at your position and tell you honestly whether a family investment company is right for you. We respond the same working day.

Or write to taxadvisory@aswatax.co.uk

Chartered Tax Adviser
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