- Pass on assets while retaining control of them
- No IHT if you survive seven years
Earlier in October, we wrote about how trusts can be a useful estate planning tool (IC, 2 October 2020). But if you want to put more into them than your inheritance tax (IHT) allowance of £325,000 you have to pay 20 per cent tax on what is paid in.
Family investment companies offer a different structure via which people can pass on wealth while maintaining control of assets, and can be more tax efficient. If you set one up you can make yourself the director, and control what assets the company invests in and when dividends are paid. The company can also have non-voting share classes, for example for children who could own the majority of the shares. And if you live for seven years after setting up the company the assets you put into it will not be subject to IHT.