Glossary · UK
What is Family Investment Company (FIC)?
A private limited company used to hold and grow family wealth, allowing investment growth to accrue to children and grandchildren outside the founders' estates.
Full Definition
A Family Investment Company is a private limited company set up to hold and grow family wealth across generations. Parents typically fund the FIC by subscribing for shares or by making a loan to the company -- the loan remains in their estate but all subsequent growth in the company's assets is outside it. Children and grandchildren hold shares from the outset, so any appreciation in the company's value accrues directly to them without IHT or triggering a potentially exempt transfer clock. The founders may retain control through voting shares (A shares), while economic interests (B shares or similar) go to children, allowing distributions or capital to be directed flexibly as family circumstances change. Investment growth and income inside the FIC is subject to corporation tax -- 19% for profits under GBP 50,000; 25% for profits above GBP 250,000 in 2026/27; marginal relief between those thresholds -- rather than higher-rate income tax at 40% or additional-rate at 45%, which can be a significant saving for high earners who do not need to extract the income immediately. Dividends extracted from the FIC are taxed as dividend income in the recipient's hands using their dividend allowance (GBP 500 for 2026/27) and applicable rate. FICs are more complex and costly to run than simple trusts: they require statutory accounts, annual corporation tax returns, dividend decisions, and potentially audit. HMRC has been gathering data on FIC structures since 2019 but has not introduced specific anti-avoidance legislation as of 2026. They remain a legitimate and commonly used structure when properly implemented with professional advice.