Family investment companies — keep control and reduce tax

One month, the Office for Budget Responsibility halves its 2025 growth forecast to 1%; the next, the International Monetary Fund predicts 1.2%. But one thing’s clear: slow growth means less revenue and more pressure on the chancellor to raise taxes.

The 2024 Autumn Statement was already big on tax.

There were headline changes to national insurance, capital gains tax and inheritance tax (IHT). This included the introduction of caps on agricultural and business property reliefs from IHT from 6 April 2026.

Lobbying against these caps will doubtless increase as that date approaches. But rightly or wrongly, IHT is itself a constant. So everyone should be mindful whether their estate will exceed the £325,000 threshold for IHT.

And remember too, that from April 2027, pensions also count: another 2024 Autumn Statement change. If this affects you, you need a plan, not least because most people would rather their wealth went to loved ones, not HMRC.

The gift trap people fall into

“Just give it away before you die” sounds simple. But it’s not that easy.

If you die too soon after making a gift, your estate could still get hit with the full 40% inheritance tax.

Here’s how it works —

• Gifts made more than seven years before death: no IHT

• Gifts three to seven years before death: tax rate reduces by 8% each year

• Gifts made within three years: full 40% IHT applies

Plus, the gift has to be absolute — no strings attached. You can’t gift your house and keep living in it rent-free; HMRC will treat that as if you never gifted it at all.

The real problem — no one wants to give up control

Many parents are happy to pass on wealth — but not control. Enter the family investment company (FIC).

With an FIC you can —

• Gift shares, or money for your children to buy shares, in the FIC

• Stay in control of investments, dividends, and overall strategy as director

Your children get the ownership — and potential IHT benefits — while you keep the control.

Why FICs are front of mind just now

We’ve set up several FICs recently. They’re not right for everyone, but they solve a classic IHT dilemma: how to give without giving up.

An FIC can help reduce your estate’s tax bill while letting you keep control of your wealth.

Ready to see if an FIC could work for your family? We work with your financial and tax advisers to ensure everything fits together seamlessly.

Contact me to find out more and you can read more commentary on our news and views page.