A family investment company is any company used by a family in their wealth or succession planning. Their use has grown significantly in recent years, particularly in instances where it is difficult for individuals to pass value into a trust without immediate tax charges but there is a desire to continue to have some control or influence over the family's wealth protection.
Scenario:
Bob and Margaret have built up significant funds through their trading business that was realised some years ago. They now feel ready to pass on their wealth to their grandchildren but do not believe that giving them significant funds in their own name at too young an age is a good idea.
If they are deemed domiciled in the UK, a transfer into a trust could give rise to an immediate inheritance tax charge of 20%. Whereas, the use of a family investment company may allow for a gift as a PET and therefore no inheritance tax liabilities are triggered unless there is a death within seven years.