An FIC is usually set up by a ‘founder’ who creates at least two classes of shares:

• The founder’s shares carry voting rights but no rights to capital or income
• Non-voting shares are then given to family members, who have a right to capital and income but no control over the company.

The founder is usually also the director of the FIC. The non-voting shareholders can’t make decisions about investment strategy or the issue of dividends, but they can benefit financially. The value of company assets can be removed from the founder’s estate for inheritance tax purposes.

Non-voting shareholders can be given voting shares later on if this is appropriate (e.g. once minor children become adults), and may be appointed as a director of the company by the founder.

It’s important to draft bespoke articles of association and shareholders’ agreements to regulate which family members can make decisions, and what happens when the shareholders die or when other events occur.

The government has said it wants to reduce corporation tax to 17% by 2020 – this means the company structure can be beneficial to many wealth holders.

Some of the tax benefits of an FIC include:

• Most dividends paid to the FIC are exempt from corporation tax, regardless of whether the dividend has a UK or overseas source
• In many cases there’s no tax charge for setting up an FIC
• Transfer of company shares to shareholders (family members) count as a gift and are therefore potentially exempt from inheritance tax
• Shareholders won’t be taxed on the first £2,000 of dividends that they receive in a tax year.

Our tax experts are able to advise whether an FIC is the most tax-efficient option for your estate and circumstances.

FICs won’t be suitable for everyone. Some things to be aware of include:

• Some transfers may incur capital gains tax or stamp duty land tax
• Assets may be subject to both corporation tax (as company profit) and income tax (as dividends)
• You (as the company founder) could be taxed for any dividends paid to your children if they are still minors
• Information about the company and its owner must be publically available.

Our solicitors work closely with you to determine whether a company structure is right for your situation and fits in with your plans for succession and the rest of your estate.

Not necessarily, since your shares as a founder will form part of your estate and pass on to your beneficiaries according to the terms of your existing Will.

However, we do recommend reviewing your Will regularly, especially if setting up a new wealth-holding structure like an FIC. This will ensure your estate is still set up in the most tax efficient way and give you peace of mind that after your assets will be passed on in the way you want after your death.

Call us to discuss your estate planning needs on 0370 1500 100 – or use our online form and we’ll call you back.

Our partner-led team comprises experts in tax, trusts, and wealth structuring. We also have teams in real estate and corporate law, which means we can offer everything you need for your FIC in-house.

We have considerable experience advising on the wealth structuring options for complex estates and frequently work with international and high net worth clients. Whatever your needs, we have the expertise to help you plan effectively

Meet the team