- – Our People – Impact Beyond Business
- — Our People – Sustainability
- A No Bull Podcast
- Accounting & Finance Expertise
- ACCOUNTING ADVISORY
- Advisory
- AIM LISTED COMPANIES
- AIM LISTED COMPANIES
- Alice Stephenson – Founder & CEO, Stephenson Law
- All News
- APPRENTICES
- April Bembridge – Chief People Officer, Cooper Parry
- Are You Claiming The Right Amount? Gated
- AUDIT – WHAT OUR CLIENTS SAY
- Audit and Assurance
- B CORP
- Bundle and Pricing Options
- BUSINESS SERVICES INSIGHTS
- BUSINESS STRUCTURING
- Business Support And Grants
- Business Tax
- CAPITAL ALLOWANCES
- CAPITAL GAINS TAX
- Careers – Our Roles
- Careers Contact Us
- Careers Trainees FAQs
- Charities
- CHARITIES
- COMMUNITY
- Construction
- Contact Thank You
- Contact Us
- COOKIE POLICY
- Cooper Parry Book Club
- Cooper Parry Event
- CORPORATE AUDIT
- Corporate Finance
- Corporate Finance – What Our Clients Say
- CORPORATE FINANCE DEALS
- Corporate Finance News & Insights
- Corporate Finance News & Insights
- Corporate Social Responsibility
- Covid-19 Collaboration-news
- CP Deals
- CP Futures
- CP Innovation
- CP INNOVATION – WHAT OUR CLIENTS SAY
- CP INNOVATION FULL PAGE. – DRAFT
- CP Tech 100
- CPERS: COOPER PARRY ENQUIRY RESOLUTION SERVICE
- Creative Tax Reliefs
- CULTURE
- DIVERSITY & INCLUSION
- DIVERSITY POLICY
- EARLY CAREER PROGRAMMES
- Early Stage To SME- WHAT OUR CLIENTS SAY
- Ecommerce
- Eddie Latham & PJ Scott – Co-founders, Velocity Commerce
- EDUCATION
- EMPLOYMENT TAX
- ENVIRONMENT
- FAQS
- Financial Reporting
- Find Us
- Flexible ‘Finance Bench’
- Future Events
- Galahad Clark – Founder VivoBarefoot
- GLOBAL TALENT PROGRAMME
- GRADUATES
- HEALTHCARE INSIGHTS
- Helena Hills – Founder & CEO, TrueStart
- HIGH GROWTH LOW DOWN
- Homepage
- Homepage
- https://www.cooperparry.com/aim-audit
- Hub CP
- HUB CP – Live Lounge
- HUB CP – Live Lounge Velocity Snippets
- HUB CP – Rob Law Trunki Snippets
- Hub CP 3
- HUB CP LEADERSHIP SERIES
- HUB CP LOUNGE – PACT COFFEE
- HUB CP LOUNGE – PAUL SCHAFFER, PLUM PRODUCTS
- Hub CP Podcast
- HUB CP Thank You
- Hugo Tilmouth – Founder & CEO, The Up.co
- Impact Beyond Business
- Impact Beyond Business New template
- In Their Words
- In Their Words Retail
- INDIRECT TAX
- Inheritance Tax
- Intellectual Property & Patent Box
- INTERNATIONAL TAX
- Investment Calculator UK
- James Hyde – Founder & CEO, James and James
- Jay Richards & Cat Agostinho – Co-Founders, Imagen
- Justin Harling – CEO, CAE Technology Services
- LEGAL STUFF
- Let’s Stop Calling It R&D V2 Gated
- Life at cooper parry
- Lounge Underwear Webcast
- MAKING TAX DIGITAL
- Management Information and Reporting
- Manufacturing and Supply Chain
- Marketing Thank You
- MID MARKET – WHAT OUR CLIENTS SAY
- Mid-Market
- New Hub CP
- New Hub CP Live Lounge
- Newsletter Form
- Newsletter Thank You
- NFP Webcasts And More
- NOT FOR PROFIT
- Not For Profit Audit
- Operational Systems & Technology
- Our People
- Meet the Team
- Meet the Team Retail
- Our People – Big Business
- Our People – Board
- Our People – Business Tax
- Our People – Capital Allowances
- Our People – Corporate Finance
- Our People – CP Innovation
- Our People – Facilities & Wellbeing
- Our People – Leadership
- Our People – Marketing
- Our People – New Business Relationships
- Our People – Not for Profit
- Our People – Outsourcing
- Our People – Partners
- Our People – Pensions
- Our People – Personal Tax
- Our People – Service Charge
- Our People – Tech & High Growth
- Our People – Tech & Platforms
- Our People – Transaction Services
- Our People – Transaction Tax
- Our People – VAT
- Our People – Wealth
- Our People Audit
- Our People Team
- Our Why And Values
- Outsourcing
- OVERSEAS EXPANSION
- Past Events
- Paul Richardson – Executive Chairman, Gymshark
- Paul Turton – CEO, Pact Coffee
- Payroll
- PENSIONS AUDIT
- Personal Tax
- Personal Tax Compliance
- PLACEMENTS
- Preference Centre
- PRIVACY POLICY
- Private Equity Advisory
- PROFESSIONAL SERVICES
- PROPERTY
- PROPERTY AND LANDLORDS
- R&D Capital Allowances
- R&D Newsletter Thank You
- R&D Tax Credits Questionnaire: Are you eligible?
- Raise investment or debt
- Raising Finance
- Read All About It
- Rebelution 2
- Rebelution 2 Top Tips – Cooper Parry Corporate Finance
- Rebelution 2 Top Tips – Cooper Parry IT
- Rebelution 2 Top Tips – Cooper Parry Wealth
- Rebelution 2 Top Tips – CP Futures
- Rebelution 2 Top Tips – VAT & Brexit
- Research & Development Tax Credits
- Research And Development Tax Credits
- RESIDENCE & DOMICILE ADVICE
- Retail
- Retail Advisory
- Retail Tax
- Rob Law MBE – Founder, Trunki
- Scale Up & High Growth
- SECURITY POLICY
- Service Charge
- Service Charge Accounts
- Service Charge Snapshot
- Service Test
- SETTING UP BUSINESS IN THE UK
- SHARE INCENTIVES AND REWARD
- Share incentives: Annual Reporting
- SHAREHOLDER TAX ADVICE
- Shaun Doak – CEO, React Group Plc
- Small Business
- SNAPSHOT
- Succession Planning
- Supporting start ups
- SUSTAINABILITY
- SUSTAINABILITY ADVISORY
- SUSTAINABILITY ASSURANCE
- SUSTAINABILITY CERTIFICATION
- Sustainability News
- SUSTAINABILITY REPORTING
- SUSTAINABILITY STRATEGY
- Tax – What our clients say
- TAX COMPLIANCE SERVICES
- Tax Investigations
- Tax Services
- TAX SETTLEMENTS AND INVESTIGATIONS
- Tech & High Growth
- Tech & High Growth – What our clients say
- TEN STAGES TO INVESTMENT
- TEN STAGES TO SALE
- Test2
- This Is Us
- Tom and Tina Warner – Co-Founders, Warner’s Distillery
- TOPICAL TAX UPDATES
- Transaction Deals
- Transaction Services
- Transaction Services – What Our Clients Say
- TRANSACTION TAX
- TRANSFER PRICING
- Trusts and Estates
- UK SUBSIDIARIES OF OVERSEAS COMPANIES
- UK support for International groups
- VAT SERVICES
- Virtual Bookkeeping
- Virtual FD
- Wealth
- Wealth- What Our Clients Say
- Website How To Guide
- Welcome to the CP Family
- What our clients say
- WORK EXPERIENCE
- XCP Sign Up
- Your Development
- Your Say
- Your Say Contact Us
- – Our People – Impact Beyond Business
- — Our People – Sustainability
- A No Bull Podcast
- Accounting & Finance Expertise
- ACCOUNTING ADVISORY
- Advisory
- AIM LISTED COMPANIES
- AIM LISTED COMPANIES
- Alice Stephenson – Founder & CEO, Stephenson Law
- All News
- APPRENTICES
- April Bembridge – Chief People Officer, Cooper Parry
- Are You Claiming The Right Amount? Gated
- AUDIT – WHAT OUR CLIENTS SAY
- Audit and Assurance
- B CORP
- Bundle and Pricing Options
- BUSINESS SERVICES INSIGHTS
- BUSINESS STRUCTURING
- Business Support And Grants
- Business Tax
- CAPITAL ALLOWANCES
- CAPITAL GAINS TAX
- Careers – Our Roles
- Careers Contact Us
- Careers Trainees FAQs
- Charities
- CHARITIES
- COMMUNITY
- Construction
- Contact Thank You
- Contact Us
- COOKIE POLICY
- Cooper Parry Book Club
- Cooper Parry Event
- CORPORATE AUDIT
- Corporate Finance
- Corporate Finance – What Our Clients Say
- CORPORATE FINANCE DEALS
- Corporate Finance News & Insights
- Corporate Finance News & Insights
- Corporate Social Responsibility
- Covid-19 Collaboration-news
- CP Deals
- CP Futures
- CP Innovation
- CP INNOVATION – WHAT OUR CLIENTS SAY
- CP INNOVATION FULL PAGE. – DRAFT
- CP Tech 100
- CPERS: COOPER PARRY ENQUIRY RESOLUTION SERVICE
- Creative Tax Reliefs
- CULTURE
- DIVERSITY & INCLUSION
- DIVERSITY POLICY
- EARLY CAREER PROGRAMMES
- Early Stage To SME- WHAT OUR CLIENTS SAY
- Ecommerce
- Eddie Latham & PJ Scott – Co-founders, Velocity Commerce
- EDUCATION
- EMPLOYMENT TAX
- ENVIRONMENT
- FAQS
- Financial Reporting
- Find Us
- Flexible ‘Finance Bench’
- Future Events
- Galahad Clark – Founder VivoBarefoot
- GLOBAL TALENT PROGRAMME
- GRADUATES
- HEALTHCARE INSIGHTS
- Helena Hills – Founder & CEO, TrueStart
- HIGH GROWTH LOW DOWN
- Homepage
- Homepage
- https://www.cooperparry.com/aim-audit
- Hub CP
- HUB CP – Live Lounge
- HUB CP – Live Lounge Velocity Snippets
- HUB CP – Rob Law Trunki Snippets
- Hub CP 3
- HUB CP LEADERSHIP SERIES
- HUB CP LOUNGE – PACT COFFEE
- HUB CP LOUNGE – PAUL SCHAFFER, PLUM PRODUCTS
- Hub CP Podcast
- HUB CP Thank You
- Hugo Tilmouth – Founder & CEO, The Up.co
- Impact Beyond Business
- Impact Beyond Business New template
- In Their Words
- In Their Words Retail
- INDIRECT TAX
- Inheritance Tax
- Intellectual Property & Patent Box
- INTERNATIONAL TAX
- Investment Calculator UK
- James Hyde – Founder & CEO, James and James
- Jay Richards & Cat Agostinho – Co-Founders, Imagen
- Justin Harling – CEO, CAE Technology Services
- LEGAL STUFF
- Let’s Stop Calling It R&D V2 Gated
- Life at cooper parry
- Lounge Underwear Webcast
- MAKING TAX DIGITAL
- Management Information and Reporting
- Manufacturing and Supply Chain
- Marketing Thank You
- MID MARKET – WHAT OUR CLIENTS SAY
- Mid-Market
- New Hub CP
- New Hub CP Live Lounge
- Newsletter Form
- Newsletter Thank You
- NFP Webcasts And More
- NOT FOR PROFIT
- Not For Profit Audit
- Operational Systems & Technology
- Our People
- Meet the Team
- Meet the Team Retail
- Our People – Big Business
- Our People – Board
- Our People – Business Tax
- Our People – Capital Allowances
- Our People – Corporate Finance
- Our People – CP Innovation
- Our People – Facilities & Wellbeing
- Our People – Leadership
- Our People – Marketing
- Our People – New Business Relationships
- Our People – Not for Profit
- Our People – Outsourcing
- Our People – Partners
- Our People – Pensions
- Our People – Personal Tax
- Our People – Service Charge
- Our People – Tech & High Growth
- Our People – Tech & Platforms
- Our People – Transaction Services
- Our People – Transaction Tax
- Our People – VAT
- Our People – Wealth
- Our People Audit
- Our People Team
- Our Why And Values
- Outsourcing
- OVERSEAS EXPANSION
- Past Events
- Paul Richardson – Executive Chairman, Gymshark
- Paul Turton – CEO, Pact Coffee
- Payroll
- PENSIONS AUDIT
- Personal Tax
- Personal Tax Compliance
- PLACEMENTS
- Preference Centre
- PRIVACY POLICY
- Private Equity Advisory
- PROFESSIONAL SERVICES
- PROPERTY
- PROPERTY AND LANDLORDS
- R&D Capital Allowances
- R&D Newsletter Thank You
- R&D Tax Credits Questionnaire: Are you eligible?
- Raise investment or debt
- Raising Finance
- Read All About It
- Rebelution 2
- Rebelution 2 Top Tips – Cooper Parry Corporate Finance
- Rebelution 2 Top Tips – Cooper Parry IT
- Rebelution 2 Top Tips – Cooper Parry Wealth
- Rebelution 2 Top Tips – CP Futures
- Rebelution 2 Top Tips – VAT & Brexit
- Research & Development Tax Credits
- Research And Development Tax Credits
- RESIDENCE & DOMICILE ADVICE
- Retail
- Retail Advisory
- Retail Tax
- Rob Law MBE – Founder, Trunki
- Scale Up & High Growth
- SECURITY POLICY
- Service Charge
- Service Charge Accounts
- Service Charge Snapshot
- Service Test
- SETTING UP BUSINESS IN THE UK
- SHARE INCENTIVES AND REWARD
- Share incentives: Annual Reporting
- SHAREHOLDER TAX ADVICE
- Shaun Doak – CEO, React Group Plc
- Small Business
- SNAPSHOT
- Succession Planning
- Supporting start ups
- SUSTAINABILITY
- SUSTAINABILITY ADVISORY
- SUSTAINABILITY ASSURANCE
- SUSTAINABILITY CERTIFICATION
- Sustainability News
- SUSTAINABILITY REPORTING
- SUSTAINABILITY STRATEGY
- Tax – What our clients say
- TAX COMPLIANCE SERVICES
- Tax Investigations
- Tax Services
- TAX SETTLEMENTS AND INVESTIGATIONS
- Tech & High Growth
- Tech & High Growth – What our clients say
- TEN STAGES TO INVESTMENT
- TEN STAGES TO SALE
- Test2
- This Is Us
- Tom and Tina Warner – Co-Founders, Warner’s Distillery
- TOPICAL TAX UPDATES
- Transaction Deals
- Transaction Services
- Transaction Services – What Our Clients Say
- TRANSACTION TAX
- TRANSFER PRICING
- Trusts and Estates
- UK SUBSIDIARIES OF OVERSEAS COMPANIES
- UK support for International groups
- VAT SERVICES
- Virtual Bookkeeping
- Virtual FD
- Wealth
- Wealth- What Our Clients Say
- Website How To Guide
- Welcome to the CP Family
- What our clients say
- WORK EXPERIENCE
- XCP Sign Up
- Your Development
- Your Say
- Your Say Contact Us
No one likes talking about death. But if you have children it’s worth looking at how best to pass on any money or assets to them. Take a look at our guide to family investment companies. It’ll help you decide if it’s the right option for you.
WHAT IS A FAMILY INVESTMENT COMPANY (FIC)?
It is a privately owned company that is controlled and run by its Directors. The Directors of the FIC are usually the parents, and the shareholders are usually the children (or other family members).
This ensures that the day-to-day control of the business, investment and profit distribution decisions remain with the parents and the children benefit from distributions.
It is an efficient way of transferring value to family members whilst retaining some control.
SOUNDS GREAT! HOW DOES IT WORK?
The Articles and provisions of the company can be tailored to suit your specific family needs, outlining rules for profit distributions, capital return, share transfers and the appointment of directors.
Usually, the future growth within the company would be distributed to the children.
AS A PARENT, HOW DO I KEEP CONTROL?
By subscribing for shares with voting rights.
IF MY CHILDREN ARE ALSO SHAREHOLDERS, HOW DO THEY RECEIVE DISTRIBUTIONS BUT NOT HAVE CONTROL?
You would gift non-voting shares to your children or you could gift them cash to subscribe for (or buy) non-voting shares in the company.
Alternatively, you could settle these non-voting shares into a Trust for the benefit of the children if you feel that direct receipt of the distributions isn’t appropriate at the current time.
WHAT IF MY CHILD DECIDES TO SELL THEIR SHARES AND I DON’T WANT THE SHARES LEAVING THE FAMILY?
You can stipulate in the Articles who can and cannot hold shares, for example; bloodline family members, spouses or for the shares to be returned to the company.
HOW DO I GET MONEY OR ASSETS INTO THE FIC?
You can fund the FIC directly – by transferring assets to the company, or you could loan the company the assets, however a loan would not remove the asset from your estate for inheritance tax purposes.
If you transfer/gift non-cash assets into your FIC, you will trigger a capital gains tax charge on the basis that you are disposing of the asset. You will be entitled to use your CGT annual exemption against the gain (calculated by market value less acquisition costs) provided it hasn’t already been utilised by other disposals.
If you loan the assets or cash, you could potentially redeem the loan at a later date, if required. If you make a loan to the company, the company could pay you interest at the market rate on the amount that it has borrowed. This would return some income to yourself, but would be taxable on you personally as interest received at the savings rate. Repayments of capital would not be taxable.
HOW DOES A FIC SAVE TAX?
By holding assets within a FIC, rather than personally, you bring that income in to the corporation tax regime and out of the income tax regime.
A company pays 19% tax on its profits, whereas an individual who is a higher rate taxpayer will pay 40% or 45%.
Companies generally do not pay tax on dividends received.
Management and business expenses incurred by a company can be offset against the company profits, reducing the amount chargeable to tax. Individuals are unable to offset these expenses against their personal income.
If you extract cash – pay a dividend – then the recipient will be taxed on that dividend under the income tax regime.
IS THERE AN ADVANTAGE OF PUTTING ASSETS INTO A FIC RATHER THAN A TRUST?
In most cases, a gift to a trust in excess of £325,000 will incur a lifetime IHT charge of 20%.
A gift into a FIC would be potentially exempt transfer, meaning that if the parent survives for 7 years after making the gift, no inheritance tax will be due. There is a taper structure should the parent not survive the full 7 years.
BENEFITS
- Takes advantage of the lower corporation tax rates
- Companies do not pay tax on dividends received, so a dividend of £10,000 can be fully reinvested within the company. A £10,000 dividend received by an individual would suffer £3,810 tax deducted before the individual could reinvest
- Management and administration fees can be deducted against company profits
- Straightforward company structure
- Parents retain control
- Control can be passed to children at a later date, if desired
- Can protect assets in case of family breakdown (further advice may be required if this is your intention)
- Dividends can potentially be paid tax-free up to £14,570 (where no other income is received)
- Reduces the parents’ taxable estate for inheritance tax purposes, whilst retaining control
DRAWBACKS
- Can be inefficient if all income earned within the company is required to be paid out immediately
- Administration costs of setting up and running a company
- The law can change, and the corporation tax rates may increase
FIC v TRUSTS. AN OVERVIEW
For more details, take a look at our ‘at a glance’ FIC v TRUSTS overview.
BE THE FIRST TO GET EXCLUSIVE LEADERSHIP INSIGHTS
