Tax Structuring for Family Companies

Looking for professional tax structuring for family companies?

Anyone who runs a family business knows that it can be difficult to spend time on your own personal financial position, but it shouldn’t be ignored. Our team of experts can get to know your family’s unique circumstances and objectives in order to ensure you are extracting profits from your family business in the most tax-efficient manner.

This can include the payment of dividends, pension contributions, and utilising the family’s allowances and rate bands. It is also possible to protect wealth for future generations by utilising trusts.

You may find that there are assets that have been acquired within a company that are not core to the trading activities. For instance, there may be investment properties, surplus cash or even investment portfolios held with in the company or group. Such assets may affect the availability of reliefs such as Business Asset Disposal Relief and Inheritance Tax (IHT) reliefs.

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Tax advice for family companies

We have extensive experience and can support you with:

Trusts

Trusts can be used as a succession tool for families who would like to keep the company, or the wealth produced within the company, for the long-term benefit of the family. Trusts can also be used to pay costs such as nursery, school and university fees in a tax-efficient manner.

Family Investment Companies (FICs)

FICs are primarily designed to permit the transfer of assets to the younger generation, while allowing the older generation to maintain some element of control over the assets. This solution significantly reduces an individual’s annual tax exposure when compared to personal tax rates and without creating an immediate IHT charge.

Dividends

Individuals are typically required to pay income tax on the extraction of profits from family companies as dividends, however the structure of a FIC allows capital introduced to be withdrawn free of income tax and Capital Gains Tax.

Corporation tax

Corporation tax will be payable on any taxable sources of income and capital gains realised by the Family Investment Companies. Our team of experts can help to guide you through the rules and regulations.

All you need to know about tax structuring

What is tax structuring?

Tax structuring services include a range of solutions designed to reduce the impact of taxation costs through the use of efficient structuring techniques.

Do I need tax structuring?

If you own a family business, you may not have time to prioritise efficient tax planning. Having an expert team to help structure your taxes can help to provide you with peace of mind.

What is a FIC?

FICs, or Family Investment Companies, are a long-term investment vehicle for transferring wealth through generations of a family. They are structured as a private company with family members as shareholders.

What are the benefits of using a FIC?

A primary benefit of using a FIC is that the directors can transfer value and responsibility over time and in a tax efficient manner, while retaining overall control. They also have the power to make investment decisions for the FIC.

Can a FIC be used in pension planning?

FICs can be employed in pension planning for the shareholders. Reinvesting its income into other assets and/or making pension contributions could reduce or eliminate corporation tax payable on the FIC’s income.