How to Set Up a Family Investment Company in the UK in 2026

A family investment company is a UK private limited company that holds and invests a family's wealth. The founders usually keep the voting shares and run it as directors, while children or family trusts hold shares that carry the growth. Its income and gains are taxed under Corporation Tax, and most dividends it receives are exempt.

The hard part is the design. The articles, the share classes and the way money goes in decide how inheritance tax, dividend tax and stamp duty apply, and they are hard to change once family members own shares. Since 18 November 2025, every director must also verify their identity with Companies House.

This is where we come in. We form the company for you: the name check, the articles and share classes your family and its tax adviser agree, the identity checks, the filing and a bank-ready file. One team runs it from start to finish, from €350, and the company is ready in about a week.

What Is a Family Investment Company

A family investment company, or FIC, is a private limited company set up to hold and invest family money. It is not a special legal form and needs no licence. It is an ordinary company with tailored articles and several classes of shares, so the founders keep control while other family members own the value that builds up over time.

How the Share Classes Work

The founders put money in as a loan, a share subscription or both. They hold the voting shares and sit on the board, so they decide what the company invests in and when it pays dividends. Children, grandchildren or family trusts hold non-voting or growth shares. The articles give each class its own rights to dividends and to capital. Like any UK holding company, the company is a separate legal person and owns its investments in its own name.

Why Families Use a Family Investment Company

Families choose this structure for three reasons. Control stays with the founders through the voting shares and the board. Future growth can sit in shares the next generation owns from the start. And profits are taxed inside the company under Corporation Tax, with tax on the shareholders only when money is paid out. The tax result depends on the family's own facts, so the design is settled with a tax adviser before any assets go in.

Family Investment Company or Family Office

A family office is the team or service that manages a wealthy family's money. A FIC is often the vehicle that team works through. A smaller family can use the company itself as a simple family office. The same idea is sometimes known as a personal investment company. Larger families add staff, trusts and several companies, as our guide to setting up a family office explains.

Funding a Family Investment Company and Inheritance Tax

The company is funded by a loan from the founders, by gifts that let family members subscribe for shares, or by both. The choice decides what stays in the founders' estates for inheritance tax. UK inheritance tax is 40% above the £325,000 nil-rate band, and that band is frozen until 5 April 2031.

Funding the Company by Loan

A founder can lend some or all of the money. A loan is not a gift, and the right to be repaid stays in the lender's estate at its full value. The investment growth builds up in the company, in the value of the family's shares. A repayment returns the founders' own money rather than paying them income.

Funding the Company by Gift

Founders can also give cash to family members, who use it to subscribe for their own shares, or give them shares directly. HMRC's Inheritance Tax Manual (IHTM04057) defines a potentially exempt transfer as a gift by an individual to another individual or to a specified trust. A gift made to the company itself does not fit that definition, so the order of the gifts and share issues matters.

Inheritance Tax Rules That Apply

Gifts to people are only taxed if the donor gives away more than £325,000 and dies within 7 years, and taper relief can reduce the tax on some gifts. Budget 2025 also keeps the residence nil-rate band at £175,000 until 5 April 2031. Business Relief does not apply, because GOV.UK excludes businesses that mainly make or hold investments. Since 6 April 2025, long-term UK residents, who were UK resident for at least 10 of the previous 20 tax years, can also pay inheritance tax on their overseas assets.

Read more: inheritance tax planning.

Family Investment Company Tax in the UK

The company pays Corporation Tax on its income and gains, and most dividends it receives are exempt. The rate is 19% on profits up to £50,000 and 25% above £250,000, but a company that only holds investments usually pays 25% on all its profits. Shareholders pay tax only on what is paid out to them.

Corporation Tax on Income and Gains

HMRC's Company Taxation Manual (CTM03951) says close investment-holding companies pay the 25% main rate and cannot use the small profits rate or marginal relief. A close company that simply holds investments, even a bank deposit account, falls into that group. A company that exists wholly or mainly to let land to unconnected people is not in that group, so it can use the 19% rate and marginal relief.

Dividends the Company Receives

Part 9A of the Corporation Tax Act 2009 exempts most dividends a company receives from UK and foreign companies. For larger companies, the dividend must fall into an exempt class, such as holdings of less than 10% of a class of shares. The tax benefits of a UK holding company rest on the same exemption.

Taking Money Out of the Company

Money comes out in three main ways. Dividends are taxed on each shareholder at 10.75%, 35.75% or 39.35% from 6 April 2026, after a £500 allowance. A salary is only possible for someone who works for the company, such as a director, and runs through PAYE. Loan repayments are not taxed as income, but interest on the loan is, and savings rates rise to 22%, 42% and 47% from 6 April 2027. Our guide on how to pay yourself from your business covers each route.

Can a Family Investment Company Buy Property

Yes. The company can buy residential and commercial property in the UK in its own name. The rules for companies differ from those for individuals: stamp duty is higher on residential purchases, an annual tax applies above £500,000, and mortgage interest is a company cost rather than a basic rate tax reduction.

Stamp Duty Land Tax for Companies

Stamp Duty Land Tax applies in England and Northern Ireland, at residential rates that run from 0% on the first £125,000 to 12% on the part above £1.5 million. GOV.UK's guidance for corporate bodies adds a 5% surcharge on residential property bought by companies. Since 31 October 2024, certain companies pay a flat 17% on residential property costing more than £500,000. Relief from the 17% rate may be available, subject to conditions, where the property is used in a property rental business or bought by a developer or trader, among other cases. Buyers who are not UK resident pay a further 2% surcharge.

Annual Tax on Enveloped Dwellings

The Annual Tax on Enveloped Dwellings (ATED) is a yearly charge on companies that own UK residential property worth more than £500,000. For 1 April 2026 to 31 March 2027, it starts at £4,600 for a property valued at £500,000 to £1 million and reaches £303,450 above £20 million. Property let commercially to people not connected with the owners can get relief, but it is not automatic and is claimed through the ATED online service.

Mortgage Interest in a Company

Since 6 April 2020, individual landlords get only a basic rate tax reduction for mortgage interest on homes they let, at 20% today. From 6 April 2027 that reduction moves to 22%, and property income is taxed at 22%, 42% and 47% in England, Wales and Northern Ireland. For a company, interest falls under the loan relationship rules (HMRC Property Income Manual PIM2052), so the restriction for individuals does not apply. Our guide to a limited company for property in the UK covers the purchase, and some families hold each property in its own subsidiary, as in SPV and holding company structures.

Read more: banking for real estate and property companies.

Family Investment Company vs a Family Trust

Both hold assets for the next generation, but they work differently. A discretionary trust falls under the relevant property rules, with charges on entry, every 10 years and on exit. A family investment company has none of those charges, but its shares belong outright to the people who hold them, and each holding counts in that person's estate.

Neither structure is right in every case. A trust lets trustees decide later who benefits and when, which a fixed shareholding cannot do. The two can also be combined, with a trust holding a class of shares, as in a holding company and trust structure.

Setting Up a Family Investment Company in the UK

Setting up a family investment company in the UK takes about a week with us once the family has agreed the structure. Companies House usually registers online applications within 24 hours. The design, settled with the family's tax adviser, takes longer.

Before You Start

Agree four points first: who holds which class of shares, what rights each class carries, who the directors are, and whether money goes in as a loan, a gift or both. Each director needs photo ID for Companies House identity verification. Anyone with more than 25% of the shares or votes is a person with significant control and must be named. A trust that will hold shares needs its trustees in place.

We Form the Company and File the Articles

We check the name, prepare the application and file it with the articles and share structure you have agreed. Model articles do not set out separate share classes, so the company uses its own articles to fix the voting, dividend and capital rights of each class. We add the statement of capital, the people with significant control and a UK registered office, as for any limited company in the UK.

Once the company exists, the shares go to the founders, family members or trustees as planned. HMRC posts the company's 10-digit Unique Taxpayer Reference, and we prepare the file for the bank.

Read more: UK company registration and UK company formation for non-residents.

Family Investment Company Costs in 2026

A standard company costs from €350 with us. That includes set-up guidance, the name check, identity verification guidance, the KYC pack, the statement of capital, the people with significant control, the £100 Companies House fee, the filing and a bank-ready file. Bespoke articles and share classes are quoted with your setup. Trusts, foundations, funds and regulated structures are quoted separately.

Most of the cost comes in the running years: the accounts, the tax return and any ATED returns. Tax advice on the design is a separate cost.

First-Year Cost by Company Profile

A company with only cash and listed shares sits at the low end. Property and trustees add work every year, not only at formation.

What Companies House Makes Public

Every FIC sits on the public register, even though the details of its investments are not listed. Anyone can see its directors, its people with significant control, the shareholders given in its confirmation statement, its articles and its yearly accounts. Small companies can leave the profit and loss account out of the accounts they file. Late accounts cost £150 to £1,500, doubled if late two years in a row.

Read more: cost of setting up a UK company.

Business Banking for a Family Investment Company

The company needs a business account in its own name before it can receive the founders' money or invest. UK banks open accounts for investment companies, but they set strict rules on residence and purpose. Our banking partners open multi-currency accounts remotely, and we prepare their file from the same KYC pack.

At the time of writing, NatWest asks for at least one person on the application to be UK resident and the business to be registered for UK tax. Santander's Business Current Account Classic asks that everyone linked to the account lives in the UK, and costs £9.99 a month after a free first year for start-ups. Starling does not open accounts for holding companies. Banks also check where the family's money came from, so a clear source of funds file shortens the review. See our guides to banking for family offices and, where a trust holds shares, banking for trusts.

Opening the Account Through Our Banking Partners

We work with regulated payment partners that open multi-currency accounts for UK companies in days, fully remotely, with owners and directors anywhere. They are payment institutions and electronic money institutions, not banks. We build one file with the company documents, the owners' identity and the source of the funds, and make the introduction.

The business account holds cash and pays costs. The investments sit in a separate investment or brokerage account in the company's name. Our guides to business investment accounts and money market funds explain the options for company cash.

UK Family Investment Company vs Offshore Companies

For a UK-resident family, UK tax rules can reach a company formed abroad. A company abroad that is run from the UK is UK resident, and anti-avoidance rules can tax UK residents on income held offshore. Jersey, Guernsey and the Isle of Man are used more by families who live outside the UK or hold assets in several countries.

HMRC's International Manual (INTM120060) says a company incorporated abroad is resident where its central management and control is. The transfer of assets abroad rules (sections 714 to 751 of the Income Tax Act 2007) can tax UK-resident individuals on income that arises to a company abroad. Where a UK company owns the island company, the controlled foreign company rules in Part 9A of TIOPA 2010 target profits diverted from the UK.

The island rates are lower, but for a UK-resident family the UK residence and anti-avoidance rules usually decide the tax, not the island rate. The islands are used more by families who live abroad, by companies owned by a trust run from the island, or where assets and heirs are spread across several countries.

UK vs Jersey

Jersey companies pay 0% on most income and 10% on financial services business. Jersey is a long-standing centre for family trusts, and an island holding company often sits under one, as our guide on setting up a trust in Jersey explains. A UK company costs less to form and suits a family whose directors live in the UK.

UK vs Guernsey

Guernsey taxes most companies at 0% and regulated activities at 10%. It is used for trusts, funds and private trust companies, and families outside the UK often hold investments through a Guernsey holding company. For a family living in the UK, the UK residence and anti-avoidance rules still apply to an island company it controls.

UK vs Isle of Man

The Isle of Man charges 0% on most company income and shares a VAT area with the UK. Its companies and LLCs are used for holding structures, as our Isle of Man holding company guide shows. A UK company is simpler for families who live and invest in the UK.

Who a Family Investment Company Is Wrong For

The structure is used mainly by UK-resident families with a large sum to invest for the long term, where the founders want to keep control. It is a poor fit for money the founders may need back soon, for small sums where the yearly costs are large next to the assets, and for families who want nothing on a public register.

It also does not fit a family that wants trustees to decide later who benefits. A trading business is often kept in its own company, which can sit under a family holding company separate from the investments. Families leaving the UK can check how UK inheritance tax applies to non-residents.

Common Mistakes With a Family Investment Company

Most problems come from the order of the steps and from share rights that do not match the plan. Each of these three is avoided by settling the design before money moves.

Gifting Money to the Company Itself

Some founders give cash straight to the company. A potentially exempt transfer must be a gift to another individual or to a specified trust, so a gift to the company does not get the 7-year treatment that a gift to a family member can get. With inheritance tax at 40% above the nil-rate band, that difference matters. Agree with the adviser whether money goes in as a loan, a share subscription or gifts to family members.

Giving Children Shares With the Wrong Rights

Articles copied from another company often give every share the same vote and the same share of the capital. The children's shares may then carry votes, or the founders' shares may keep the growth. Changing the articles later needs a special resolution of the shareholders, and the new articles go on the public register. Set out the rights of each class before the company is formed.

Putting the Family Home Into the Company

Buying the family's own home through the company brings the 5% surcharge and, on a home worth over £500,000, the 17% rate and ATED from £4,600 a year. The ATED rental relief does not apply where someone connected with the owners lives in the property. Check each property against the relief conditions before the company buys it.

Bottom Line

A family investment company is a UK private limited company with tailored articles and share classes. The founders keep control, and the next generation can hold the growth. Income and gains are taxed under Corporation Tax, usually at 25% for a company that only holds investments, and most dividends it receives are exempt. Property brings the 5% surcharge, the 17% rate and ATED. Inheritance tax depends on how the money goes in, with the 40% rate and the £325,000 band frozen until 5 April 2031. A trust gives trustees more discretion but carries entry, 10-year and exit charges. For a UK-resident family, an island company does not step outside the UK residence and anti-avoidance rules. The result depends on the family's circumstances, so confirm it with a tax adviser first. Our UK company formation service forms the company and files the structure you agree, from €350, in about a week.

Sources

• GOV.UK, How Inheritance Tax works: thresholds, rules and allowances (updated 8 November 2024)
• HM Treasury, Budget 2025 Overview of tax legislation and rates (November 2025)
• HMRC, Inheritance Tax Manual IHTM04057, Potentially exempt transfers
• HMRC, Inheritance Tax Manual IHTM42081, Ten year anniversary charge
• GOV.UK, Trusts and Inheritance Tax (updated 6 April 2025)
• GOV.UK, Inheritance Tax if you're a long-term UK resident (6 April 2025)
• GOV.UK, What qualifies for Business Relief (2026)
• GOV.UK, Corporation Tax rates and reliefs
• HMRC, Company Taxation Manual CTM03951, Close investment-holding companies
• HMRC, International Manual INTM653080, Distribution exemption for portfolio holdings
• GOV.UK, Tax on dividends
• GOV.UK, Company Tax Returns
• GOV.UK, Stamp Duty Land Tax: corporate bodies (updated 2 May 2025)
• GOV.UK, Stamp Duty Land Tax residential property rates
• GOV.UK, Annual Tax on Enveloped Dwellings: the basics (updated 4 March 2026)
• GOV.UK, Annual Tax on Enveloped Dwellings reliefs and exemptions (updated 2 May 2025)
• HMRC, Changes to tax relief for residential landlords (6 April 2017)
• HMRC, Property Income Manual PIM2052, Finance costs
• HM Treasury, Changes to tax rates for property, savings and dividend income (November 2025)
• legislation.gov.uk, Corporation Tax Act 2009, section 14
• HMRC, International Manual INTM120060, Central management and control
• HMRC, International Manual INTM600120, Transfer of assets abroad
• HMRC, International Manual INTM191100, Controlled foreign companies overview
• HMRC, Trusts, Settlements and Estates Manual TSEM4300, Settlements on minor children
• Companies House, Update to accounts filing from April 2028 (23 October 2026)
• GOV.UK, Companies House fees (updated 25 September 2026)
• GOV.UK, Verify your identity for Companies House (updated 30 April 2026)
• GOV.UK, People with significant control (updated 30 July 2026)
• GOV.UK, Penalties for late filing of annual accounts
• NatWest, Business current account
• Santander, Business current accounts
• Starling Bank, Business account eligibility

This article is general information, not tax or legal advice. Tax rules and rates change, and the tax result of a family investment company depends on the family's own circumstances. Confirm the structure with a qualified tax adviser before any assets go in. Binderr forms the company and files the documents the family and its adviser agree; it does not give tax advice.