What is a family investment company (FIC)?

It's one structure families use to think about the future. Whether it fits yours depends on your circumstances, your family and your wider position, so it's a question for a consultation, not a given.

What is a family investment company?

A family investment company is a regular private limited company, set up with a specific purpose: holding family assets and passing them on in a controlled way.

The idea is that you keep control while wealth shifts to the next generation. You're typically a director, so you make the decisions about how the company invests, what it holds and when money comes out. Family members hold shares, often through different share classes, so they have a stake in the value without necessarily having a say in the running of it.

That control is the main reason families look at an FIC over simply gifting assets. Gift a property or a lump sum outright and you've given away both the asset and the control. With an FIC, the value can pass down over time through shares while you stay at the helm.

The tax treatment is a separate question, and it depends heavily on what the company holds, how it's structured and your wider estate. That's worked through with a senior advisor rather than assumed from a general definition.

FIC vs a trust

A family investment company is often compared with a trust, because both are ways of passing wealth to the next generation while keeping some control over it. They work very differently.

A trust hands assets to trustees, who hold and manage them for the beneficiaries. An FIC keeps assets inside a company that you direct. With a trust, control sits with the trustees and the terms of the trust. With an FIC, control sits with the directors and the company's articles.

The tax treatment differs too, and this is where families most often want specialist input. Trusts and companies are taxed under different rules, the charges arise at different points, and which comes out ahead depends entirely on the assets involved, the amounts, and your family's wider position. There's no general answer that holds for everyone, so this isn't somewhere to rely on a rule of thumb.

Complexity is the other difference. Both an FIC and a trust need setting up properly and running correctly year after year. Neither is something you set up once and forget.

FIC vs a standard limited company or SPV

An FIC is a limited company. The difference between an FIC and a standard property investment company, often called an SPV, is purpose and structure rather than the type of entity.

A standard property investment company exists to buy and hold buy-to-let property and run it as a business. A family investment company exists to hold family wealth and pass it on. The legal building blocks are the same: directors, shareholders, articles of association and shares.

What changes is how those blocks are arranged. An FIC usually has a more deliberate share structure, often with different classes of share that separate control from value, and articles written to support how the family wants wealth to pass down. A standard SPV is generally set up around the needs of the property business and its lenders.

Because the foundations are shared, the same care over getting the structure right applies. The share structure and articles you choose at the start shape your options for years, so they're worth getting right rather than unwinding later.

Can a family investment company hold property?

Yes. Property can sit inside a family investment company in the same way it sits inside any limited company: the company owns it, and you hold shares in the company.

If you already hold property in your personal name and want it inside an FIC, the property has to be transferred to the company. That transfer is a sale to the company in the eyes of HMRC, so the same Stamp Duty Land Tax and capital gains tax points that apply to any incorporation apply here too.

For inheritance tax, holding property through a company can give more options than holding it personally, because shares are more straightforward to pass on than the property itself. How that plays out for your estate is covered in the inheritance tax guide, and the right share structure is part of the conversation.

Is an FIC right for you?

A family investment company suits some families and some estates. It doesn't suit all of them.

It tends to come into its own where there's meaningful wealth to pass on, a family to pass it to, and a desire to keep control while doing so. For smaller estates, or where the goal is straightforward, the added structure and running costs of an FIC may not earn their keep, and a simpler approach can do the job.

The honest answer is that it depends on your wealth, your family, and how your estate is set up now. The options also narrow the longer planning is left. That's the kind of thing worth working through properly with a senior advisor, rather than starting from an assumption that an FIC is the answer.

You can also get tax planning advice on estate and succession planning more broadly, where an FIC is one of the structures on the table.