FICs: A Practical Approach to Modern Wealth Planning

As the inheritance tax (IHT) landscape continues to evolve, many families are rethinking how they structure and protect their wealth. Legislative changes coming into force over the next few years are set to reshape long-standing planning strategies – particularly around pensions, business relief, and global asset exposure.

Against this backdrop, Family Investment Companies (FICs) are increasingly being used as a flexible and tax-efficient solution for long-term wealth planning.

Why the landscape is changing?

Recent and upcoming changes mean that traditional planning routes may no longer deliver the same outcomes:

• Business Relief is becoming more restricted from April 2026
• AIM shares will face a flat IHT rate
• From April 2027, unused pensions may fall within the IHT net
• Changes to non-dom rules are expanding exposure to UK IHT

These shifts are prompting families to look for structures that allow them to retain control, while moving future growth outside of their estates.

What is a Family Investment Company?

A Family Investment Company is a private limited company used to hold and manage family wealth – typically investments, property, or surplus cash.

Unlike trusts, FICs provide a corporate structure that allows:

• Control to remain with the founders (typically parents)
• Value to be passed to the next generation through share ownership
• Flexibility in how and when income is distributed

Key benefits of a FIC

1. Separation of ownership and control
Parents can retain decision-making power while passing economic value to children or grandchildren.

2. A lower tax environment for growth
Profits within a FIC are subject to corporation tax (currently 25%), which can be lower than personal tax rates.

3. Long-term IHT planning
Future growth can sit outside the founders’ estates, helping to reduce inheritance tax exposure over time.

4. Flexibility vs traditional structures
FICs avoid some of the rigidity and administrative burden associated with trusts, offering greater adaptability as circumstances change.

How a FIC works in practice?

Typically, funds are introduced into the company either via:

• A director’s loan (providing flexibility and access), or
• A share subscription (supporting long-term wealth transfer)

From there, investments grow within the company. Families can then extract value through a combination of:

• Tax-free loan repayments
• Dividends (tailored across family members)
• Retained profits for reinvestment

The result is a structure that allows both control and tax planning to sit side by side.

Is a FIC right for you?

FICs are not a one-size-fits-all solution. Their effectiveness depends on your overall tax position, family structure, and long-term objectives.

However, they are particularly relevant for:

• Business owners planning an exit
• Families with surplus cash or investment portfolios
• Those concerned about future IHT exposure
• Individuals looking to involve the next generation in wealth planning

How Arnold Hill & Co LLP can help

Family Investment Companies can be a powerful part of a wider wealth strategy when structured correctly.

Download our guide to Family Investment Companies to explore how they work in more detail or speak to Drupen Patel, Personal Tax Senior Manager, to discuss whether a FIC could be right for your circumstances. Get in touch today.

Author, Drupen Patel - Personal Tax Senior Manager

Drupen.Patel@arnoldhill.co.uk