Family Investment Company Structures and Trust Planning Explained

Experts from our Private Client and Business Advisory teams recently took part in an interview with BusinessTV. Paula Fraser, Hugo Hill and Tom Andrew shared insights on how a Family Investment Company (FICs) and Trusts are often used in tandem to form an optimal strategy for business owners who wish to preserve and grow their wealth.  

FICs aren’t a niche tool anymore – they’re now a central part of how high-net-worth families structure long-term wealth. Their appeal lies in the combination of control, tax efficiency, and the ability to pass value to future generations without immediately giving up ownership. In a shifting tax landscape, families are increasingly exploring how FICs, often used alongside trusts, can strengthen succession planning and future-proof their wealth. 

Although these vehicles have been around for decades they’re seeing a surge in popularity due to recent changes in the tax landscape such as the increase in dividend tax rates and restrictions around Inheritance Tax. They can take approximately 6-8 weeks to set up, from instructing the initial advice to the final stages of implementation, so there is still time to get them working for you before April 2026. 

You can watch the full interview or read all the key highlights summarised in our blog below.

What is a Family Investment Company (FIC)?

“A Family Investment Company (often referred to as a FIC or family-owned investment holding company) is a private company used by high-net-worth individuals to hold and manage investments. Instead of owning assets personally, investments are held through the company, allowing families to benefit from corporation tax rates rather than higher personal tax rates. FICs are commonly used for long-term planning, enabling wealth to be retained, grown, and passed to future generations in a controlled and tax-efficient way.” 

Why use a Family Investment Company for wealth planning?

“Families use Family Investment Companies to retain control over assets while reducing exposure to inheritance tax and personal taxes. A FIC allows founders to keep voting control through the structure of the shares while passing economic growth to children or trusts. This makes FICs particularly attractive for succession planning, in particular for inheritance tax (IHT) purposes, and protecting family wealth for future generations, especially where high-net-worth individuals want flexibility without giving assets away outright.” 

How does a Family Investment Company work in practice?

“A Family Investment Company works by transferring cash or assets into a company in exchange for shares or loans. Different share classes can be created to control voting rights, dividend streams, and future growth. Investments such as shares, funds, or residential property are held within the company, and profits are taxed at corporation tax rates. Over time, growth can accrue outside the individual’s estate, helping with inheritance tax planning.” 

What are the tax benefits of a Family Investment Company?

“FICs benefit from lower corporation tax rates compared to personal tax rates on income. Many dividends received by investment companies are exempt from corporation tax, which can result in the value of the portfolio accumulating at a much quicker rate. For inheritance tax purposes, growth on shares gifted to future generations or trusts may sit outside the estate, making FICs a powerful long-term planning tool.” 

Is a Family Investment Company subject to inheritance tax?

“Family Investment Company shares and loan accounts are not themselves exempt from inheritance tax, but the structure can significantly reduce IHT exposure through careful planning. Shares gifted may qualify as potentially exempt transfers, meaning they fall outside the estate after seven years. Future growth on those shares is also removed from the taxable estate, helping families protect wealth and manage inheritance tax more effectively over time.” 

Family Investment Company vs Trusts – which is better?

“FICs and Trusts serve different purposes and are often used together. Trusts offer flexibility and control over distributions, while FICs provide tax efficiency and governance through a corporate structure. Trusts can hold FIC shares, combining inheritance tax planning with corporation tax benefits. The right approach depends on family circumstances, asset types, and long-term goals rather than choosing one structure in isolation.” 

Can you put property into a Family Investment Company?

“Yes, residential property can be held within a Family Investment Company, but this requires careful consideration. Stamp Duty Land Tax (SDLT) and Capital Gains Tax (CGT) may apply on transfers into a FIC, and tax reliefs available to individuals may not apply to companies. However, rental profits are taxed at corporation tax rates, and long-term growth can be achieved for future generations. Professional advice is essential before transferring property into a FIC.” 

What are the disadvantages of a Family Investment Company?

“FICs are not suitable for everyone. They involve setup and ongoing administration costs, company reporting requirements, and professional fees. There may also be tax charges on transferring existing assets into the company. FICs work best as a long-term strategy and are less effective for short-term planning or where families need immediate access to capital, due to the tax costs of extracting value from the company.” 

When is a Family Investment Company not suitable?

“A FIC may not be appropriate where wealth is below certain thresholds, where assets are needed for personal spending, or where families are unwilling to accept long-term planning commitments. It may also be less suitable if inheritance tax exposure is already limited or if liquidity is required in the short-term. Proper assessment is key before proceeding.” 

Is a Family Investment Company right for you?

“A Family Investment Company can be highly effective for wealthy families and business owners focused on long-term planning, inheritance tax mitigation, and protecting wealth for future generations. However, the structure must align with family dynamics, asset types, and succession goals. Advice from tax, legal, and wealth planning specialists is essential to ensure the structure delivers both tax efficiency and peace of mind.” 

How AAB can help

AAB has long-standing experience advising on and acting for multi-generational Family Investment Companies and Trusts. This depth of knowledge allows us to guide you confidently through both the set-up and ongoing management of a FIC and/or Trust, ensuring the structure is tailored to your specific objectives. 

If you would like to explore whether a Family Investment Company or Trust may be appropriate for your personal circumstances, please feel free to get in touch with Tom Andrew or your usual contact within the AAB Private Client team.