HMRC established a dedicated Family Investment Company (FIC) team in April 2019 to examine the growing use of FICs in estate and tax planning. After extensive research, the team has been disbanded — absorbed into HMRC's broader Wealthy and Mid-sized Business Compliance division — following a finding that there is no correlation between the use of FICs and failure to report tax affairs correctly.

What is a Family Investment Company?

A FIC is an ordinary company whose primary function is holding and managing investments rather than conducting a trading business. FICs offer significant structural flexibility: multiple share classes can provide differentiated rights to income, capital and control across different family members and generations. The Articles and any Shareholders' Agreement can be tailored to reflect the family's specific governance and succession objectives.

FICs can deliver tax advantages across income tax, CGT and IHT planning. A notable benefit is the ability to consolidate multiple family members' investments under unified management rather than maintaining separate individual holdings.

What HMRC found

HMRC's research found that FIC users were typically high-net-worth individuals (£200,000+ income or £2 million+ wealth), generally over 50, with average asset holdings of approximately £5 million. Importantly, HMRC found no evidence of systematic tax non-compliance among FIC users.

What this means

HMRC's restructuring suggests that FIC use is no longer viewed as inherently suspicious. Proper tax compliance remains essential, and existing anti-avoidance legislation continues to apply to specific structures. But FICs represent a legitimate, tax-efficient vehicle for collective family wealth management.

For questions about FICs, please contact Paul Davidoff or a member of the team.