What is a Family Investment Company (FIC)?

Family Investment Companies (FICs) — A Modern Tool for Wealth Preservation

A Family Investment Company (FIC) is a private company, usually limited by shares, designed to hold, manage, and grow family wealth. Parents or founders often serve as directors, retaining control over how the assets are invested. At the same time, shares can be gradually transferred to children or even placed within trusts to safeguard the next generation.

This structure has become increasingly popular in recent years, particularly among high-net-worth families in London, Surrey, and across the UK, who are looking for a balance between control, flexibility, and long-term tax efficiency.

Unlike traditional trusts, which often remove decision-making power from the founder, an FIC allows parents to remain actively involved in shaping the family’s wealth strategy. At the same time, it creates a mechanism for gradual estate planning, ensuring future growth accrues outside the taxable estate — a powerful way to mitigate Inheritance Tax (IHT) exposure.

At CIGMA Accounting, we work with families to structure FICs in a way that aligns with their overall legacy goals. This includes:

• Designing the right share structure to balance control and succession.

• Modelling tax outcomes to quantify IHT savings and compare FICs with alternatives like trusts.

• Coordinating with legal advisors to integrate FICs into wider estate planning.

• Managing compliance with HMRC, Companies House, and reporting obligations.

Handled correctly, an FIC is not just a tax vehicle — it becomes a strategic family governance tool, enabling wealth to compound efficiently while preserving intergenerational control and purpose.

Why Families Consider Family Investment Companies (FICs)

For wealthy families in the UK, especially those in London, Surrey, and other affluent areas, a Family Investment Company (FIC) offers a compelling blend of control, flexibility, and tax efficiency. The main reasons families turn to FICs include:

Tax treatment
Profits within an FIC are subject to 25% Corporation Tax (2025 rate), which is often lower than personal income tax or trust tax rates. This means investment returns can compound more efficiently, particularly for families managing large portfolios, property wealth, or multi-asset strategies.

Inheritance planning
By transferring shares during their lifetime, parents or founders reduce the value of their taxable estate. Crucially, future growth on those shares accrues outside of the estate, providing significant Inheritance Tax (IHT) savings. This makes FICs a powerful tool for families who wish to preserve and pass on wealth without unnecessary erosion.

Governance and control
Unlike trusts, which can dilute decision-making power, FICs allow parents to retain directorships and strategic influence. This ensures founders continue to guide how capital is invested, distributed, or reinvested, while gradually involving heirs in governance — making FICs as much a family governance tool as a tax strategy.

Quantified Case Studies: FICs vs Trusts in Action

Case Study 1: The Growth-Focused Entrepreneur (FIC Advantage)

• Profile: A London-based entrepreneur with £5m in liquid investments.

• Objective: Pass wealth to children while retaining control over investment strategy.

• Approach: Assets moved into a Family Investment Company (FIC), with the founder as director and children as minority shareholders.

• Outcome:

  • Portfolio grows to £12m over 15 years.

  • Growth of £7m sits outside the founder’s estate.

  • IHT saving: £2.8m (40% of £7m).

  • Ongoing corporation tax rate: 25%, much lower than trust income tax at 45%.

 Result: FIC delivers long-term growth and control, ensuring the founder directs strategy while heirs benefit gradually.

Why This Matters in 2025

The wealth landscape in the UK is shifting. With tighter HMRC scrutiny, evolving Inheritance Tax (IHT) rules, and rising expectations around transparency and compliance, many high-net-worth families are reassessing whether traditional trusts or modern Family Investment Companies (FICs) best serve their long-term goals.

While both structures have merit, the corporate framework of an FIC can often provide:

• Visibility and governance — a structured company format, complete with directors and shareholders, that reassures both HMRC and future generations.

• Long-term flexibility — adaptability to changing family dynamics, cross-border planning, and new investment opportunities.

• Strategic alignment — the ability to integrate property wealth, private equity, and investment portfolios under a single, tax-efficient vehicle.

For families managing multi-million portfolios, London property interests, or multi-generational estates, these advantages make FICs an increasingly attractive option.

At CIGMA Accounting, we work closely with families across Mayfair, Chelsea, Hampstead, and Surrey to model how trusts and FICs perform under different scenarios. By quantifying the tax impact and tailoring governance structures, we ensure clients achieve not only tax efficiency but also clarity, control, and legacy preservation.

What is a Trust?

Trusts — Time-Tested Structures for Legacy Planning

For centuries, trusts have been the backbone of UK wealth and estate planning, enabling families to pass assets securely from one generation to the next. They remain one of the most established, trusted, and versatile vehicles for preserving wealth, offering a unique combination of protection, flexibility, and privacy that continues to appeal to high-net-worth families today.

A trust is a legal arrangement where assets — such as property, investments, or business interests — are transferred to trustees, who hold and manage them for the benefit of chosen beneficiaries. This structure allows families to:

• Protect family wealth from external risks such as divorce, creditors, or mismanagement.

• Control timing and distribution of wealth, ensuring heirs receive assets when they are ready, not simply when the benefactor passes away.

• Mitigate Inheritance Tax (IHT) through carefully structured planning, particularly with discretionary trusts and interest in possession trusts.

• Preserve privacy, as unlike companies, trusts do not have to file public accounts.

In a modern context, trusts are often used to complement Family Investment Companies (FICs), allowing families to blend the traditional protection of trusts with the governance and flexibility of corporate structures.

At CIGMA Accounting, we advise families across London’s most affluent areas — from Knightsbridge townhouses to Surrey estates — on how trusts can integrate into broader estate strategies. Our role is to ensure compliance with HMRC requirements while preserving the integrity of family wealth across generations.

Key Features of Trusts

Tax treatment:
Trusts can sometimes face higher effective tax rates than Family Investment Companies (FICs). For example, income within a discretionary trust may be taxed at up to 45%, compared to 25% Corporation Tax inside an FIC (2025 rate). However, trusts still offer significant Inheritance Tax (IHT) planning advantages. Mechanisms such as the nil rate band (£325,000 per individual), the residence nil rate band, and certain agricultural or business property reliefs allow families to transfer wealth efficiently while reducing the overall IHT burden.

Asset protection:
Trusts remain one of the strongest tools for preserving family wealth across generations. Assets placed into a discretionary trust are generally insulated from external claims, whether through divorce settlements, bankruptcy, or creditor disputes. For high-net-worth families, this ensures that legacy assets — such as family homes, land, or investment portfolios — remain intact and protected.

Control with separation:
Although trustees take on fiduciary duties, founders are not left without influence. Through letters of wishes and careful trustee selection, the settlor (founder) can guide how capital and income are distributed. This balance of control with separation makes trusts uniquely effective for families who want to safeguard wealth but also ensure responsible stewardship.

At CIGMA Accounting, we help families structure trusts in ways that maximise tax efficiency, safeguard against risks, and align with multi-generational estate strategies. Whether advising on discretionary trusts for London families or specialist arrangements for UHNW clients in Surrey and beyond, our team ensures that trusts remain a powerful, compliant, and tailored solution within modern wealth planning.

Case Study 2: A Practical Illustration of Trust

Consider a family that transfers £5 million into a discretionary trust in 2025. Over 15 years, the portfolio grows to £12 million. Even after applying the 10th anniversary charges and periodic trust reporting requirements, the structure substantially reduces the family’s Inheritance Tax (IHT) exposure, while ensuring that wealth passes in line with long-term objectives.

The key benefit is that growth within the trust accrues outside the settlor’s estate, meaning that future increases in value are protected from IHT. This can equate to millions saved in tax liabilities compared with leaving assets directly in an individual’s estate.

Beyond tax efficiency, trusts bring an added dimension of governance. Unlike simple ownership transfers, a discretionary trust can hold a wide variety of assets — from family homes in prime London locations to art collections, heritage assets, or shares in a family business. Trustees are bound by fiduciary duties and supported by letters of wishes, ensuring decisions are made with future generations in mind.

At CIGMA Accounting, we help families not only model the quantified tax savings but also design trust structures that protect cultural assets, maintain privacy, and support multi-generational continuity. For wealthy families in areas such as Mayfair, Knightsbridge, Hampstead, and Surrey, a trust remains one of the most resilient and versatile tools in the estate planning toolkit.

Why Trusts Still Matter in 2025

Even as Family Investment Companies (FICs) continue to rise in popularity, trusts retain a distinctive and enduring role in wealth structuring. For many wealthy families in the UK, particularly those with complex arrangements or international connections, a trust offers benefits that extend beyond tax planning.

Key Reasons Trusts Remain Relevant

• Adaptability for complex families: Trusts are often better suited when there are multiple beneficiaries with different needs, such as children from other marriages, or vulnerable family members requiring long-term financial security.

• International structuring: For families with beneficiaries across jurisdictions — common in global wealth hubs such as London, Geneva, and Dubai — trusts can provide cross-border continuity that FICs sometimes lack.

• Privacy & asset protection: Trusts separate ownership from control. This makes them effective shields in the event of divorce, creditor claims, or family disputes, while maintaining discretion and confidentiality.

• A cornerstone of UK private wealth planning: Trusts have been recognised for centuries and remain a familiar, court-tested, and HMRC-accepted vehicle for inheritance tax (IHT) mitigation.

The Tax Landscape for Trusts in 2025

Trusts continue to offer IHT advantages, but come with their tax regime:

• Trust income tax: Up to 45% on non-dividend income and 39.35% on dividends.

• Capital Gains Tax (CGT): Reduced annual exemption of £3,000, significantly lower than an individual’s allowance.

• Inheritance Tax (IHT):

  • 20% entry charge for discretionary trusts.

  • 6% periodic charge at each 10-year anniversary.

  • Exit charges when assets leave the trust.

Despite these charges, the ability to move future asset growth outside the estate remains a critical advantage. For high-value estates in areas such as Belgravia, Hampstead, or the Home Counties, this can equate to millions in preserved wealth.

Trusts vs. FICs: The Subtle Distinction

Whereas FICs provide corporate-style governance and tax efficiency, trusts bring privacy, flexibility, and resilience. For international, blended, or highly sensitive family arrangements, trusts may remain the more effective tool — even in 2025.

At CIGMA Accounting, we work with wealthy families and trustees to model real-world outcomes, comparing the savings, governance benefits, and long-term resilience of Trusts vs. Family Investment Companies. This high-touch, discreet approach ensures that wealth is preserved, disputes are minimised, and multi-generational continuity is protected.

Family Investment Companies vs. Trusts — A Quantified Comparison (2025 Lens)

2025 Reforms: Why Timing Matters

The private wealth planning landscape in the UK is shifting, and timing is becoming a critical factor for families considering whether to establish a Trust or a Family Investment Company (FIC). Recent and upcoming reforms make this an especially important moment for high-net-worth families, trustees, and advisers.

• Pension IHT reform (expected 2027)
  Proposals to change how pensions are treated for inheritance tax could make trusts more attractive for pension-linked assets. Families who traditionally relied on pensions as an IHT-efficient vehicle may need to revisit their structures sooner rather than later.

• Corporation Tax at 25% (2025 rate)
  FICs continue to remain competitive because corporation tax is still significantly lower than the top rates of trust income tax (up to 45%). For families with substantial investment portfolios, especially in London’s affluent areas such as Chelsea, Knightsbridge, and Hampstead, the compounding effect of lower corporate taxation can translate into millions saved over time.

• HMRC scrutiny intensifies
  Both structures are under increased observation, but FICs are drawing sharper HMRC focus due to their rise in popularity among ultra-high-net-worth families. This doesn’t diminish their value, but it does underline the importance of specialist structuring, compliance, and proactive governance. Families who rely on “DIY” setups or off-the-shelf templates may find themselves vulnerable to challenge.

 At CIGMA Accounting, we help families time their planning intelligently — modelling scenarios under current rules, anticipated reforms, and potential HMRC interpretations. This ensures that decisions made in 2025 remain robust in 2035, preserving both wealth and peace of mind.

Who Should Choose a Trust?

While Family Investment Companies (FICs) are increasingly popular, there are many situations where a Trust remains the superior choice for wealthy families in the UK.

• Families with heritage assets
  Those holding art collections, listed buildings, or historic estates often find that a discretionary or life interest trust provides a structured framework for preservation. These assets are safeguarded while ensuring Inheritance Tax (IHT) planning is optimised.

• Non-doms and international families
  For families with beneficiaries or assets spread across multiple jurisdictions, Trusts provide more cross-border flexibility than FICs. They can help mitigate exposure to both UK and overseas tax regimes while offering confidentiality and continuity.

• Parents protecting future heirs
  Trusts allow families to pass on wealth while maintaining safeguards. For example, spendthrift provisions can ensure that children or grandchildren receive support without being able to squander capital prematurely.

• Privacy and creditor protection
  Unlike FICs, which are companies and therefore subject to a degree of public visibility, Trusts offer discretion. Assets placed into trust are generally protected against divorce claims, creditor disputes, or family disagreements — ensuring legacy preservation with privacy.

Who Should Choose an FIC?

A Family Investment Company (FIC) can be particularly attractive for families who value control, governance, and long-term efficiency.

• Entrepreneurs retaining control
  Business owners who want to transfer value while keeping strategic oversight often prefer the FIC model. As directors, parents or founders can guide investment decisions while gradually passing shares to heirs.

• Families with significant portfolios (£2m+)
  For families holding large property or investment portfolios, the 25% corporation tax rate (2025) often compares favourably with higher trust or personal tax rates, making FICs a cost-efficient wealth vehicle.

• Educating the next generation
  By giving children defined shareholding roles, parents can introduce them to governance and wealth management in a structured way — often a smoother learning curve than trusts.

Succession with minimal disruption
Because FICs are corporate entities, share transfers can be staged gradually, ensuring succession feels seamless without triggering unnecessary complexity.

FAQs: Trusts vs Family Investment Companies (FICs) in 2025

1. What is the main difference between a Family Investment Company and a Trust?

A Family Investment Company (FIC) is a corporate structure where parents can retain control as directors while gradually passing wealth through shareholdings. A Trust, by contrast, separates ownership and control, with trustees managing assets on behalf of beneficiaries. Both can reduce Inheritance Tax (IHT) exposure, but the level of control, privacy, and tax treatment differs.

2. Are Family Investment Companies still tax efficient in 2025?

Yes — FICs remain attractive in 2025 because profits are taxed at 25% Corporation Tax, often lower than trust income tax rates (up to 45%). However, HMRC scrutiny of FICs has increased, making professional structuring and compliance more important than ever.

3. When should a wealthy family choose a Trust instead of an FIC?

A Trust is often better for families with heritage assets, complex international beneficiaries, or situations where privacy and asset protection (e.g., against divorce or creditors) are more important than corporate visibility.

4. How do FICs help with Inheritance Tax planning?

By transferring shares to children or heirs during their lifetime, parents reduce the taxable value of their estate. Any future growth within the FIC accrues outside the estate, making it a powerful tool for long-term succession planning.

5. Can I use both a Trust and an FIC?

Yes — many high-net-worth families now use a hybrid approach, combining trusts for discretion and protection with FICs for tax efficiency and control. This layered strategy can be highly effective for multi-generational wealth preservation.

6. Why work with CIGMA Accounting on Trusts and FICs?

Unlike high-street accountants, CIGMA Accounting specialises in bespoke estate planning for high-net-worth families, modelling the quantified benefits of Trust vs FIC structures over decades. With offices in London and Surrey, we serve families in Mayfair, Chelsea, Wimbledon, and other affluent areas where inheritance tax planning is a priority.

Conclusion — Trust or FIC in 2025?

There is no universal answer when it comes to Trusts vs Family Investment Companies (FICs).

• Trusts remain unrivalled for privacy, protection, and international structuring, particularly where complex family arrangements or heritage assets are involved.

• FICs, however, are rapidly gaining ground in 2025, offering corporate-style governance, lower tax leakage, and long-term inheritance tax efficiency for families managing significant portfolios, property, or multi-generational wealth.

 For many ultra-high net worth families in the UK, the most smartest approach is hybrid — blending both Trusts and FICs to layer protections, optimise tax planning, and ensure a smooth succession.

At CIGMA Accounting, we go beyond the high-street approach. Our specialists model the quantified impact of Trust vs FIC structures over decades, coordinate with legal and valuation experts, and ensure full HMRC compliance. This bespoke, discreet service allows our clients — from London to Surrey, Mayfair to Wimbledon — to preserve wealth, minimise inheritance tax, and pass on a legacy with confidence.