Family Investment Companies (FICs) are often talked about ascomplex structures, but at their core, they’re simply companies. That meansthey can hold most types of assets — from cash and investments to shares,loans, property, and even interests in family businesses. This flexibility isexactly what makes them so attractive, allowing a FIC to act as a central“wrapper” for family wealth, where investments can be managed, grown, andpassed down in a structured way. However, just because a FIC can holdsomething doesn’t always mean it should.

A note of caution: residential property

One area where extra care is needed is UK residentialproperty. Holding residential property within a company structure can triggeradditional tax charges. Properties that are not let out on a commercial basismay fall within the Annual Tax on Enveloped Dwellings (ATED) regime, which canbe costly depending on the value of the property. On top of that, companiespurchasing residential property can face higher rates of Stamp Duty Land Tax(SDLT), currently up to 17% in some cases. For that reason, FICs are generallynot the right vehicle for holding residential property unless it forms part ofa genuine commercial letting arrangement. This is an area where getting thestructure wrong can be expensive, so it is worth thinking carefully beforeincluding property within a FIC.

Supporting the next generation — without giving moneyaway

One of the more interesting uses of a FIC is to supportfamily members who want to start or grow a business. Rather than gifting moneyoutright, a FIC can invest in a new venture, either through a loan or by takingshares. This allows families to provide funding while maintaining structure andaccountability. In practice, this often means the individual seeking fundingneeds to present a clear business plan and financial forecasts, and in somecases proposals are reviewed by other family members or independent directorsto ensure decisions are made on a commercial footing. If the business succeeds,the benefits flow back into the FIC, allowing the wider family to share in thatsuccess.

A structure that should fit your family — not the otherway around

FICs are highly flexible, but that flexibility needs to beused carefully. What works well for one family may not be appropriate foranother, particularly when it comes to the types of assets held and how theyare structured. Property, in particular, requires careful consideration toavoid unnecessary tax exposure. With the right advice, a FIC can be shapedaround your specific goals, whether that is long-term wealth planning,supporting future generations, or managing investments more effectively.

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