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- Financial Fitness - Published Jan 2018 by Raoul Ruiz Martinez
- Six Tough Questions You Need to Ask - Published in Nov 2017 by Raoul Ruiz Martinez
- Plan for a Successful Retirement - Published Oct 2017 by Raoul Ruiz Martinez
- 5-year Plan, 10-year Plan, 30-Year Plan. Do you have yours? - Published August 2017 by Raoul Ruiz Martinez
- The Will Bank Opportunity by John L Douglas - Published in The Journal of the Law Society of Scotland 17th July 2017
- August 2017 - HMRC & Offshore Accounts for UK Residents
- A New Year, A New Start…. January 2017
- Inheritance Tax (IHT) Planning (Part 3) - Published November 2016
- Planning for a Better Future? Forget Trusts. Think Family Investment Companies! - Published Nov 16
- Inheritance Tax Planning (Part 2) - Published August 2016
- BREXIT: What do we know as investors and what are the unknowns? Published in July 2016
- Inheritance Tax Planning (Part 1) - Published in June 2016
- Why is tidy a key word in financial planning? Published May 2016
- The Future of International Financial Planning - Published in March 2016
- Volatility: Global Financial Markets and Tax - Published Feburary 2016
- Financial Information Sharing for 2016 - Published December 2015
Summary of the 2015 Pension Flexibility - Published 5th May 2015
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- Retirement and Savings – The Facts on Inflation published November 2012
- Finesco Prsentation on New Pension Rules - A New Generation Begins
HMRC Pension Tax Relief Changes
- Emergency Budget:
- Budget Day: 22 June 2010
- Capital Gains Tax Angles
- Long Term Care
- QROPS: Transferring UK Pensions Overseas
- The State of Pensions
- ISA Changes Affecting You



Planning for a Better Future? Forget Trusts. Think Family Investment Companies! - Published Nov 16
With the uncertainties of the Brexit and the European Union still incapable of unionising fiscal policies, those individuals with significant assets and savings are looking to Family Investment Companies (FICs) to provide a definitive route for their future.
For many years Trusts have provided a tax-efficient means of estate planning, as well as helping one’s children and grandchildren. Recent changes to legislation for UK domiciled individuals have limited what you’re able to place into trust, in nearly every case to £325,000 within a seven-year period.
This restriction is perhaps the driving force in the renewed interest in FICs, a concept which has actually been around for many years.
Consider the FIC as a company into which you can build different rights, restrictions and share classes. It does not necessarily have to trade and can simply hold different assets as an investment portfolio, or possibly even the transfer an existing portfolio of investments into an FIC, depending on whether this creates any taxable event.
What are the benefits and why would you bother with the additional expense?
If managed correctly, assets can grow and income then becomes taxable within the company at 20% (for UK companies, this is to be reduced to 19% by 2017 and down to 17% by 2020) rather than at the higher rate of income tax. For example, with regards to UK dividends (income from share capital), there is no tax payable at all within the FIC. At that time you can decide whether you want to take some income from the FIC, either as a dividend distribution from the FIC, or perhaps you simply “draw down” some of the loan used to set up the FIC in the first case.
The “deferral” of tax under personal assessment also means that you remain in control of when you are personally assessed for tax – a very similar to the concept of the whole of life assurance investment bonds. This adds to the overall effect of keeping control of your wealth, in terms of how it is invested, the tax planning advantages and ensures that the assets pass on safely during and after your lifetime.
As with all planning aspects it is imperative that you understand any disadvantages. The costs and administration involved in setting up a limited company. Technically, your accounts are a matter of public record, which anyone is free to inspect. Possibly, and in the longer term, if the company pays tax on gains and then you also take that out as a dividend, you could pay more tax as a result.
Setting up a FIC is not a clear and straightforward choice. Ensure you undertake the required the due diligence beforehand, not just with an accountant or tax adviser, but also a financial adviser and, where necessary, a legal adviser. For example, there may be some challenging effects to planning in respect of Wills, who you want to be shareholders, and the benefits you want each associated individual to get in future. Essentially, savings in income tax will in the most part outweigh the potential risks, and possible longer-term inheritance tax (IHT) or capital tax savings on top of that.
How do I fund an FIC?
The company founder can establish a large director’s loan account from which they should be able to withdraw funds in later years with no adverse tax implications. This could also be a mixture of funding by loan and by share capital.
How does the tax position compare when comparing ownership with/without a FIC?
In the UK, corporation tax is currently 20% (income tax up to 45%), due to fall to 17% by 2020. Investments in UK shares also provide tax free UK dividends received in a FIC.
How should a FIC be structured?
This should be founded on your long term objectives. One of the key features of the FIC is their flexibility. For instance, you may have a founder shareholder, who keeps a tight control over the FIC, with the different classes of shares for each family member, delegating further flexibility over how dividends are distributed and also future asset growth. Even though trusts have become less fashionable, many FICs can have trusts as shareholders for that added layer of certainty.
This article is intended to provide a general review of certain topics and its purpose is to inform but NOT to recommend or support any specific investments or course of action.
Raoul Ruiz Martinez is a resident and independent consultant for Finesco Financial Services Ltd., Glasgow and advises clients on private financial matters in both the UK and throughout Europe under the MiFID regulation. Finesco Financial Services Ltd is authorised and regulated by the Financial Conduct Authority (FCA). Some of the services provided are not regulated by the FCA because they are not included within the Financial Services and Markets Act 2000.
Raoul has a weekly radio feature (Raoul’s Rant) on the Owen Gee Solid Gold Sunday morning show on KissFM Algarve.