Personal Investment Company

A long term investment vehicle to retain and grow family wealth.

 

A personal investment company (PIC) allows for higher post-tax profits and efficient family wealth protection and planning for income and inheritance tax purposes.

The tax benefits

  • Dividend income is generally tax free

  • Gains generally taxed at 19% with inflation taken into account

  • Rental losses can be offset against other income in the company

  • Portfolio and other management fees can be deducted for tax purposes

  • Investment income and gains generated could be paid into a pension plan

 

Business Planning

Profits from family businesses are used for long term personal investments through a personal investments company, with monies lent by the trading company. This retains a trading company that can focus on it’s trading activities and an investment company which can subsequently used to fund retirement.

Retirement Planning

The intention would be for the PIC to invest for the long term with income extracted via dividends, say in retirement, when the individual’s income is lower and when the personal rate of tax is likely to be lower. Any additional funds previously lent to the PIC can be taken out by loan repayment until exhausted.

 

Family Wealth

In the absence of a PIC, if a spouse or civil partner is subject to lower rates of tax, investments can be transferred to their name utilising their lower rate tax bands. Alternatively if an outright gift to a spouse or civil partner is not appropriate and control of the overall investment strategy is desired, shares in a PIC could be used to optimise personal income levels whilst the donor retains control. Furthermore, the amount of personal income arising and the tax points can be controlled, potentially delaying tax liabilities by a year or more.

 

A PIC could be an ideal vehicle to fund the university costs. Adult children could be shareholders and receive dividends from the company.