Family investment companies: passing wealth to the next generation while retaining control

Wednesday, 30 September 2026

Many successful business owners spend years building wealth but less time thinking about how that wealth will be passed on to future generations. With inheritance tax rules becoming increasingly important for larger estates, many families are looking for ways to transfer wealth efficiently whilst retaining a degree of control. One structure that has grown in popularity is the Family Investment Company (FIC).

What is a Family Investment Company?

A Family Investment Company is a private company established to hold family investments. These might include investment portfolios, cash deposits, shareholdings or property investments.

Typically, parents or founders provide the initial capital and retain control of the company, whilst introducing children or grandchildren as shareholders. This can allow future growth in value to benefit younger generations while giving founders oversight of how the assets are managed.

Why are business owners considering Family Investment Companies?

For many entrepreneurs, particularly following a business sale, there can be a significant increase in personal wealth. While this provides new opportunities, it can also create future inheritance tax considerations.

A Family Investment Company can help families balance three key objectives:

  • Preserving wealth across generations
  • Retaining control over assets
  • Creating a flexible framework for future gifting

Unlike an outright gift, founders can often remain directors of the company and retain voting rights, allowing them to influence investment decisions and the timing of distributions.

Potential benefits

Control

One of the main attractions of a Family Investment Company is the ability to retain influence over family wealth. Founders can typically remain involved in decisions relating to investments, governance and distributions.

Wealth transfer

Shares can be structured so that future growth accrues to children or grandchildren rather than remaining within the founders’ estates. This may create inheritance tax planning opportunities, subject to individual circumstances and professional advice.

Engaging the next generation

A Family Investment Company can help younger family members become involved in discussions around investing, financial responsibility and long-term stewardship of family wealth.

For families concerned about passing significant assets to children too early, it can provide greater structure and oversight than making outright gifts.

Tax considerations

Family Investment Companies are often discussed because of their tax characteristics, but they should not be viewed as a tax solution alone.

Investments held within a company are subject to corporation tax rules, which differ from those that apply to investments held personally. In some circumstances, this can be advantageous, particularly where profits are retained for long-term growth.

However, tax treatment can be complex and will depend on factors including the investments held, the company’s structure and how funds are eventually distributed to family members.

Specialist tax and legal advice is therefore essential before establishing a Family Investment Company.

Points to consider

Whilst Family Investment Companies can be highly effective in the right circumstances, they are not suitable for everyone.

Key considerations include:

  • The cost of establishing and running the company
  • Ongoing legal, tax and administrative responsibilities
  • The need for regular company reporting and governance
  • The fact that profits may be taxed differently when ultimately distributed to shareholders
  • The importance of ensuring the structure aligns with wider estate planning objectives

Is a Family Investment Company right for you?

A Family Investment Company may be worth considering if you have accumulated significant personal wealth, are planning for a future business sale, or are already thinking about how wealth will be passed to the next generation.

For many families, the appeal lies not only in potential tax efficiencies but also in the ability to retain control, involve younger generations and create a structured long-term plan for family wealth.

As with any estate planning strategy, a Family Investment Company should be considered as part of a broader discussion with your financial planner, tax adviser and legal adviser to ensure it reflects your family’s goals and circumstances.

Colin Monton is Head of Corporate and Entrepreneur Development at Quilter Cheviot, working with business owners and entrepreneurs on investment and wealth planning before and after a sale. Quilter Cheviot is one of the UK’s largest discretionary investment management firms.

Investments and the income from them can go down as well as up, you may not get back what you invest.

This material is not tax, legal or accounting advice and should not be relied on for tax, legal or accounting purposes. Quilter Cheviot Limited does not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting adviser(s) before engaging in any transaction.

Quilter Cheviot can provide planning and investment advice to the directors of an existing FIC. However, due to the specialist tax and legal considerations, we cannot advise on or instruct the set up or structure of a FIC.

Quilter Cheviot and Quilter Cheviot Investment Management are trading names of Quilter Cheviot Limited. Quilter Cheviot Limited is registered in England and Wales with number 01923571, registered office at Senator House, 85 Queen Victoria Street, London, EC4V 4AB. Quilter Cheviot Limited is a member of the London Stock Exchange and authorised and regulated by the UK Financial Conduct Authority and as an approved Financial Services Provider by the Financial Sector Conduct Authority in South Africa.

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