FIC vs personal investing

To keep the comparison clear. It shows what builds up inside the company compared with what you would hold personally, both before any extraction. In practice there is further tax when money leaves the company: a loan repayment is tax-free, but a dividend is taxed on the recipient. That second layer narrows the gap, so treat the result as the best case for the company.

25%, the main rate of corporation tax for 2026/27. A family investment company is usually a close investment-holding company, which cannot use the 19% small profits rate or marginal relief. Dividends the company receives from other companies are generally exempt, so the 25% applies mainly to interest, rent and chargeable gains. If the company ever qualified for the lower rate, the result would change.

Because that is how the rules work. A company is generally exempt on dividends it receives, so a UK company paying a dividend does not create a second layer of corporation tax for the family company. An individual receiving the same dividend is taxed on it at 10.75%, 35.75% or 39.35% after the £500 dividend allowance. This difference is a main reason the company can come out ahead.

It applies capital gains tax at 18% or 24% depending on your tax band, after the £3,000 annual exempt amount. It assumes gains are realised and taxed in the way set out on the page, not rolled up indefinitely. Real outcomes depend on when you sell, other gains you make and whether you hold investments in an ISA or pension, which the calculator does not model.

No. It leaves out set-up costs and the annual cost of accounts, a corporation tax return and Companies House filings. These costs are real and can reduce or remove the advantage for smaller sums. Set a rough annual cost against the yearly difference the calculator shows to judge whether the company is worthwhile.

Because a basic-rate taxpayer pays 20% on interest, which is less than the 25% a company pays, and 10.75% on dividends. The company's advantage grows with your marginal rate. At lower rates the gap closes or reverses, which is one reason a family investment company usually suits higher and additional rate taxpayers with surplus funds.

Use cautious, realistic figures rather than best cases, and split the return between income and growth if the calculator asks you to. Investment returns are not guaranteed and can fall, so it is worth running more than one scenario. The calculator assumes steady returns each year, which real markets do not provide. We do not recommend investments.

It compares the sum invested in each case and does not model how the company is funded. In practice, funding by loan means the parents can be repaid tax-free and the loan stays in their estate, which affects inheritance tax rather than the income tax comparison here. See the inheritance tax and loan repayment tools for those points.

No. It compares income tax, corporation tax and capital gains tax only. The inheritance tax effect of a family investment company, which is its main advantage for many families, is estimated separately in our Inheritance tax saved by a FIC tool. Use both together for a fuller picture of the benefits.

No, it is a rough guide. The calculator uses standard assumptions and ignores your other income, running costs, how money is taken out and your family's plans. Use it to see whether the idea is worth exploring, then talk to an adviser who can model your own position. A free first call is the place to start.