Ring-fencing future property investments from Inheritance Tax

The client owns a public sector business that deals in Post Office products, services, and staff development. When he initially approached TLPI, the client was looking at long-term structures that would facilitate further investment in the most tax efficient way.

Whilst he already held a few properties, he was open to making further investments via a different set-up to improve his tax position. This would also ensure his future investments were ring-fenced and protected from excessive Inheritance Tax liabilities for his son, should the worst happen. He started his search with his son’s future in mind: how could he continue to make investments which he could pass through his family without racking up a large tax penalty?

The situation and goals

The client was looking for a structure that achieved three main goals:

• To make long-term investments in a tax-efficient manner
• To ring-fence these investments and retain total control, whilst ensuring they are protected for his son
• To grow his investment property portfolio

The approach

The client and his son attended the consultations together, gaining a full understanding of how the Family Investment Company could work for their personal and business aims and goals. They had multiple conversations with their TLPI consultant, in which the client was able to discuss any uncertainties he may have had. After receiving all the information and facts, they decided that the Family Investment Company structure was the right product for their situation and worth going ahead with.

“We were a bit unsure on how to progress with it, but our consultant helped us both to understand. He explained the benefits of the Family Investment Company and how TLPI would help us with our journey. TLPI kept in touch and sent regular communication on everything that was going on – it was fantastic.”

TLPI client

Why a Family Investment Company?

The client can move surplus company cash from his existing limited company over to a Family Investment Company, which not only will bring down his trading company’s year-end tax bill but will provide funding for his future investments. Alternatively, he can make a director’s loan into the FIC with his personal funds.

Once these investments have been made, they will be held within a ring-fenced, tax-efficient structure, planned with Inheritance Tax for his son in mind. TLPI are registered with HMRC to set up Family Investment Companies on behalf of our clients.

The result

The client now has his Family Investment Company set up. It is connected to his pre-existing limited company, which can move funds into the FIC. He is still in the early days of his journey: he has yet to make any investments, and is doing his own due diligence. When he comes across something that takes his interest, he will use his Family Investment Company to make the purchase and hold the property.

“I’m doing my due diligence as I search. I’ve not come across anything yet, but as and when I do, everything will be through my Family Investment Company. Go for it! It’s a great venture and great for anyone looking to increase their portfolio or long-term investments, whilst keeping them within the family.”

TLPI client