Personal Investment Companies

[Double Fault]

I've inherited fairly substantial amount of money and I'm planning to use it to max out my ISA and those of my 2 children for the next few years.

All this year's allowances are used and my pension is substantial, so I'm not inclined to put anything more into it.

My initial plan was to open a Vanguard GIA then bed and ISA each year. I'd open the GIA as a personal account.

However, based on my objective, is it financially more effective to set up and invest as a limited company, then 'remove' the required amounts each year to pay into the 3 personal ISAs?

I know there would be company set up and admin costs but they will be minimal as a family member is qualified to do this and will do it for a small amount.

[Gnevans]

You will pay corporation tax on any gains less allowable expenses.
Depending on the amount and the level of expenses this may make sense as may an offshore bond. Both have pluses and minuses re tax IHT flexibility etc.

[kiethton]

Watching with interest as am considering one myself in the next few years to mitigate IHT/provide a tax-efficient income for my wife who may stop work at some point. Seems the logical step as CG's taxes are likely to increase and pension taper levels are already breached.

Also helps to cover a few expenses, depending on what you're viewing to clock up mileage, expensed restaurant director meetings etc.

[alscar]

Also watching with interest as mine was piqued.
I’ve quickly goggled and PIC’s generally seem to be mentioned in connection with pretty chunky start up quantum’s - I saw £1m mentioned a couple of times.
Equally all seem to require expert advice to both set up and run.
As a layman on this topic I would say that for what you want , perhaps they aren’t the right vehicle but as I say would be interested in knowing more !

[greengreenwood7]

Not knowing the numbers ( not asking), or the ages of your kids....

could you open up a family GIA, which in turn would mean that whilst there'd be extra accounting annually for CGT, the disposals towards each ISA for the kids would fall under their CGT allowance?
( i believe a few brokers offer family/friends type GIA with a 'master' controller - ie/ you)

Othe rthing with a GIA depending on how you view things - is that many/most will allow margin, if you're planning ahead for IHT for your kids as well, then could perhaps just leave the monies in it growing and use margin to fund the ISA's annually ( depending on how the numbers stack up).....that way you can avoid CGT and by borrowing efectively against the monies, then you create a longer term situ where some IHT is negated, 'cos the GIA isn't worth as much as the shares/etf's that are in it.

That's part of my plan - use the GIA and as it continues to grow, just take funds from it to top up ISA's and lifestyle.If the ISA's are flexible that can work out even more neatly, as can strip some funds out for emergencies and top back up from the GIA in the same financial year.

[LooneyTunes]

Are you sure you mean Personal rather than Family Investment Company?

FICs are useful if you're looking multi-generational, but you are looking at some non-trivial startup and ongoing costs: 7-figure+ sums invested to make them worthwhile.

[NowWatchThisDrive]

Having toyed with the FIC idea for a number of years but never pulled the trigger for various reasons, I'm now in the process of setting one up. All told I reckon I'll be down about £15k for setup, and then maybe £4k a year in ongoing costs - and that's with doing what feels like a fair bit of legwork myself. And to be honest I wouldn't be at all surprised if this government ends up going after them anyway...but at least I'll have tried

[LooneyTunes]

NowWatchThisDrive said:

Having toyed with the FIC idea for a number of years but never pulled the trigger for various reasons, I'm now in the process of setting one up. All told I reckon I'll be down about £15k for setup, and then maybe £4k a year in ongoing costs - and that's with doing what feels like a fair bit of legwork myself. And to be honest I wouldn't be at all surprised if this government ends up going after them anyway...but at least I'll have tried

Fwiw, that setup figure might be light. I hit £30k on the accountants alone (validating what I told them I thought the effect was) plus probably £20-25k on lawyers. Ask depends on complexity.