Tax Planning Idea - Family Investment Company (“FIC”)
A FIC is a bespoke vehicle which is often thought of as an alternative to a family trust. It is a private company whose shareholders are family members. Like a trust, a FIC may enable parents/grandparents to retain control over assets which they introduce, whilst after a period of time removing the value from their estate for Inheritance Tax purposes. A FIC also has the added benefit of allowing income and capital to roll up at the lower tax rates applying to companies, which can be as low as 0% (on dividend income).
A hybrid structure using a FIC with a trust holding some of the shares can provide increased flexibility and tax efficiency for estate planning down the generations and is another powerful tool in family wealth and tax planning.
As always, the key to successful tax planning is to seek advice as early as possible.
If you would like more information, or would like to discuss your tax affairs in more detail, please don't hesitate to contact our Tax Partners, Steve Crompton or Lucy Williams, on the details below: