Private Client Services
Are you serious about your wealth and taxes – because HMRC is!
We all need to pay tax; but we don’t need to leave a tip! And how do you know you are paying the right amount of tax unless your tax specialist is good enough?
JVCA the friendly accountants provides a variety of services to help you be serious about your wealth and tax. As accountants we are just as serious about your tax affairs as HMRC … but the difference is we are on your side! We provide advice that is bespoke and tailored to your needs. Bringing together tax planning, tax compliance, and wealth management advice to the affluent and to high-net-worth individuals and their families
We give you a single point of advice that is both strategic and holistic. Covering your day-to-day and month-to-month tax compliance needs as well as your longer term and strategic issues like succession planning and Estate planning. Our wealth management advice is strategic – ie we don’t sell your pensions or investments – instead we give you that holistic strategic advice and liaise with your other professional advisers to make sure you are properly advised across the board.
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For many grandparents, supporting children and grandchildren financially is not just possible – it is something they actively want to do. The question is rarely whether to help, but how
Family Investment Companies (FICs)
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JVCA the friendly accountants offer a planning service for business and personal estate planning, so get in touch! Our service starts by identifying what your currently IHT bill is, then by looking at things that you can do to minimise your tax bill. We don’t just give you a report, we talk you through it. In this way you have the information to move forward.
Family investment companies
When structuring family wealth and planning for succession, there is no single solution that fits every family. Trusts have traditionally played a central role, but they come with clear drawbacks – most notably lifetime inheritance tax charges and 10 year periodic charges.
A Family Investment Company (FIC) can be an effective alternative. In simple terms, this is about using a company as the vehicle through which wealth is held, invested and gradually passed to the next generation, often with greater control, clarity and tax efficiency than a Trust.
As ever, the value lies not in the label, but in whether the structure fits your objectives.
What is a Family Investment Company?
A Family Investment Company is simply a private limited company (or, in some cases, an unlimited company) established to hold investments for a family.
There is nothing exotic about the entity itself. The planning is in the share capital and control mechanics.
Most FICs are set up as limited companies, but unlimited companies can be attractive where privacy is important, as they are not required to file accounts at Companies House.
For internationally mobile families, it may be appropriate to incorporate offshore while keeping UK tax residence initially, with the flexibility to move the company’s residence in future. This can have inheritance tax advantages, but exit charges and long-term planning must be considered carefully.
Setting up a Family Investment Company
The key decisions are strategic, not administrative.
1. Jurisdiction and company type
For UK based families, this is usually a UK company. International families may require a different approach.
2. Share capital structure
This is where a FIC earns its keep. The share classes can be designed so that:
- control sits with the parents
- economic growth accrues to children or future generations
Alphabet shares, growth shares and bespoke rights allow flexibility, albeit within a tighter framework than a discretionary trust.
Shareholders own the company, but directors control daytoday decisions. That distinction is often helpful.
3. Funding the company
A FIC can be funded through share capital, loans, or a mix of both. Loans provide flexibility in:
- extracting value later, but care is needed if shares are gifted, to avoid triggering
- antiavoidance rules.
Tax considerations
Inheritance tax
Gifting shares in a FIC is generally a potentially exempt transfer. Provided the donor survives seven years, the value passes outside the estate for IHT purposes. By contrast, gifts into a trust can trigger an immediate 20% IHT charge (above the available nil rate band), with further 10year and exit charges thereafter.
As always, capital gains tax and stamp duty must be considered alongside IHT.
Corporate taxation vs personal taxation
One of the attractions of a FIC is that investment returns are taxed within a corporate environment, which is often more favourable than personal taxation.
- Corporation tax currently applies at 25% for close investment holding companies
- This compares with personal income tax rates of up to 45% (or higher for Scottish taxpayers)
Lower tax leakage means more capital available for reinvestment.
Dividends
Most dividends received by UK companies – including many foreign dividends – are exempt from corporation tax.
Individuals, by contrast, are taxed on dividend income personally.
Capital gains
Capital gains realised within a FIC are taxed at the corporation tax rate.
Individuals disposing of assets may pay CGT at 18% or 24%, depending on the asset and their income position. Where a FIC disposes of shares in a qualifying subsidiary, the Substantial Shareholdings Exemption may apply, exempting the gain entirely – but the conditions must be met.
Interest and expenses
A FIC can usually deduct:
- interest on loans used for business purposes
- management and running expenses
These reliefs are not generally available to individual investors.
Extracting profits
Tax efficiency on the way in does not remove tax on the way out.
Extracting value from a FIC may involve:
- dividends
- salaries
- capital distributions
Each route has its own tax profile. For this reason, FICs are normally best suited to long-term planning, where wealth is allowed to compound rather than being extracted and spent annually.
When a Family Investment Company may not be appropriate
A FIC is not a universal solution.
It may be unsuitable where:
- residential property is occupied by family members and ATED applies
- investments qualify for personal reliefs such as BADR, BPR or EIS/SEIS, which may be lost in a company
- simplicity and short-term income extraction are the priority
The question is not whether a FIC works in theory, but whether it works for your family.
Final Thought
Family Investment Companies are powerful planning tools when used correctly. Like trusts, they are not plug and play solutions. The value lies in thoughtful design, disciplined use and regular review.
If you are considering whether a FIC has a role in your family’s planning, we would be happy to discuss this with you.
Get in touch: [email protected]
IHT and Estate Planning
Inheritance tax (IHT) is a tax that can – potentially- be avoided. It can certainly be minimised, so what are you doing to minimise it? With the right planning, you can ensure that more of your hard-earned wealth goes to your loved ones rather than the taxman.
Tips to start IHT planning
Get advice:
Let’s start with the obvious get advice from JVCA, the friendly accountants, we help families and business owners put tax-efficient estate plans in place, ensuring they make the most of available reliefs and exemptions.
Make or review your will
It’s shocking how many people don’t have a will—or have one that’s completely out of date.
If you have minor children, own a business or a farm, then you need to have an up-to-date will.
Employee Ownership Trust (EOT)
Selling to an Employee Ownership Trust allows a founder to transfer ownership to employees via a trust structure. This route is increasingly popular and can offer attractive tax outcomes. It often suits owners who prioritise legacy, continuity and employee engagement alongside value.
Spend more
The simplest way to avoid inheritance tax? Spend your money while you’re alive.
Start gifting sooner rather than later
Gifting can be one of the best ways to reduce your IHT bill, but it has to be done properly.
Decide if you should get married
If you and your partner aren’t married or in a civil partnership, IHT becomes a much bigger issue. …although saying “darling our accountant says we should get married for tax reasons” might not go down well!
Review how your assets are structured
How assets are owned and distributed has always made a difference, bits it’s a bigger one right now.
Pensions: use it or lose it
Because pensions are going to be taxable to IHT it makes more sense to use them up whilst you are alive than to leave them to be inherited.
Consider life insurance to cover IHT
One way to ensure your heirs don’t have to deal with a big tax bill is to take out a whole-of-life insurance policy specifically to cover IHT.
Now is the time to get your plan in order.
Contact us: [email protected] and let’s get your estate planning sorted before the taxman takes more than his fair share.
Personal tax returns
Sorting out your personal tax return is a given wend you work with us. We provide that peace of mind that means you are sorted by a professional adviser and helped to get the compliance issues ticked off without too much fuss and bother.
Whether you need your annual Self-Assessment tax returns doing or a UK Property Tax return form or are selling something and need a Capital Gains Tax calculation, well we are here to make it simple. Because we are experts.
Get in touch [email protected]