Broadfield

We advise founders on the transfer of trading company shares by way of share-for-share exchange into a family investment company (“FIC”), followed by a later sale of the trading company shares. This allows for the tax-free sale of the trading company shares due to the substantial shareholding exemption for corporation tax, with the proceeds of sale invested within a FIC.

Establishing a FIC: The founder sets up a FIC, structured such that the founder retains control but economic value mostly lies with the next generation. To find out more, please click here.

A family investment company is a popular vehicle for succession planning, wealth preservation and inheritance tax (“IHT”) mitigation. Frequently used as an alternative to trusts, it allows family members to invest collectively in assets such as shares, cash or rental property. It is a tax-efficient vehicle for accumulating wealth for the long-term benefit of a family, particularly dividend income, which generally rolls up tax-free within the company. There are no IHT entry or periodic charges, unlike with most trusts.

Such an entity is set up as a UK company, typically unlimited as statutory accounts do not generally need to be filed at Companies House. This means, however, that shareholders are liable for the company’s debts on an insolvency.

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