If you have a sum that you wish to invest and grow for the benefit of your children and grandchildren but want to retain some control over how that investment is managed and distributed a Personal (or Family) Investment Company (PIC – or FIC) might be the right structure for you.
- is a tax-efficient vehicle in which to accumulate wealth
- should be considered as a long-term investment strategy
- can hold any asset class
- is taxed in the same way as any UK company so all income and gains are subject to UK corporation tax at 19% (falling to 17% from April 2020) – compared with the top individual tax rate on income of 45% and the trust tax rate of 45%. This can mean a PIC has over 20% extra income to reinvest compared with an individual investor
- investment management fees will be a deductible expense in calculating the PIC’s taxable profits. An individual investor cannot deduct such fees in calculating his taxable income
- if property is held, rental losses can be set off against other income
See our guide for more on the key benefits of a PIC, including the tax-efficient extraction of funds and a comparison of the UK tax position of a PIC and an individual investing directly.