Sometimes a family investment company is not the answer.

Often not. A company has set-up costs, annual accounts, a tax return and Companies House filings, and these do not shrink in proportion to the money invested. Our family investment companies range from around £1m to £50m. Below that, direct gifts, the usual exemptions or a simple trust may serve you better. We will say so on a free first call and not set up something that does not fit.

Compare the likely inheritance tax saved on future growth with the cost of setting up and running the company, the tax paid inside it, and the cost of getting money out. A FIC works best with a long time horizon and substantial funds that you will not need to spend. We work through this with your figures, and our calculators give a rough first look.

It is a poor fit for regular income. Profits are taxed in the company, and dividends paid out are taxed again on the shareholder. Repaying a shareholder loan is not taxed as income, which helps, but it uses up capital and reduces the saving over time. If you need a substantial income from the money, a FIC is unlikely to be the right place for it.

Because income can be taxed twice. A company mainly holding investments pays 25% on its taxable profits, then an additional-rate taxpayer pays 39.35% on dividends. Combined, that is an effective rate of about 54.5% on profits paid out. That is why FICs suit long-term reinvestment, with growth going to the next generation, and not regular extraction beyond loan repayments.

Think carefully before gifting it. A loan to the company stays yours and can be repaid, but gifts of shares or cash cannot be taken back, and the seven-year inheritance tax clock only starts once you have given something away. Money you may need for care costs, a move or a business should generally stay in your hands. We look at how much you can safely give away.

It may not help much. Gifts of shares to individuals are potentially exempt transfers that fall out of your estate only if you survive seven years, with tapering relief after three. A gift into a discretionary trust is a chargeable transfer, charged at up to 20% above the nil-rate band. If life expectancy is short, other planning, or simply leaving things as they are, may be better.

Yes, and for many people it is the better answer. A gift to an individual is a potentially exempt transfer, free of inheritance tax if you survive seven years, with annual and other exemptions available. The drawbacks are that you lose control and the money is exposed to a child's divorce, creditors or spending. A FIC keeps control with you, at the cost of complexity.

Sometimes. A trust has no company tax layer, but lifetime transfers into a discretionary trust above the nil-rate band are charged at up to 20%, with charges of up to 6% every ten years and on exits. A FIC has no ten-yearly or exit charges but sits in a company tax system. The right answer depends on the size, the assets and your priorities.

Pensions remain tax-efficient while you are alive, but most unused pension funds and death benefits come into the estate for inheritance tax for deaths on or after 6 April 2027. That reduces the old advantage of leaving a pension untouched. A pension and a FIC do different jobs, and the sensible answer is often to use both. Take advice from a regulated financial adviser on the pension itself.

A FIC that mainly holds investments or let property does not qualify for Business Relief. A company that is mainly a holding company of trading companies may qualify, though excepted assets are excluded. From 6 April 2026, 100% relief applies on the first £2.5m of combined business and agricultural property per person, 50% above. If your wealth is in a trading business, that is a different conversation.

Usually not, unless you plan to sell the home. Moving a main residence into a company is complicated and can create tax, and the family would then be using a company's property. A FIC works best with cash, investments or an investment property portfolio. For a home, other planning may help, such as using the residence nil-rate band or gifting in other ways.

It needs some trust and communication, because the structure depends on shareholders and directors working together under shared rules. The shareholders' agreement and articles can manage disagreement but cannot remove it. In a family with open conflict, a simpler structure, or a trustee-led arrangement, may serve better. We discuss family dynamics frankly, because they shape the design.

That is a reason to design it differently, not necessarily to avoid a FIC. Shares can be held by a discretionary trust until the children are ready, the parents can keep the voting shares, and minor children's dividends need care. If you have real doubts about a child's maturity, we can recommend a structure that gives them nothing outright for now.

It can be closed, but unwinding is not free of tax. Selling investments inside the company triggers corporation tax on gains, and distributions on a winding up are taxed on the shareholders. Gifts of shares already made cannot be reversed. That is why the decision should be made on the full picture, not as a trial. See our page on closing a family investment company.

The main risks are that the tax assumptions change, that the structure is not run in line with the documents, that the family needs the money back or that a disagreement arises. No FIC-specific legislation has been introduced to date, but tax law can change. We show the risks in writing and design the structure to be robust.

Yes. We start every project from a blank piece of paper, not from a product, so if a family investment company is not the best answer we will say so, and explain what we would do instead, which may be doing nothing. The first call is free. We would rather lose an engagement than set up a structure that doesn't fit.

For some families, yes. Regular gifts out of surplus income, if properly documented and made from income, not capital, are exempt from inheritance tax, along with the annual exemption and small gifts. They suit people with a large surplus income, and they involve no company at all. They do not move the growth of a capital sum out of the estate in the way a FIC can.