Personal investment companies

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Summary: If you have a sum that you wish to invest and grow for the benefit of your heirs, but want to retain future control of how that investment is managed and distributed a Personal Investment Company (PIC) might be the right structure for you. Here we summarise the benefits of a PIC, including the tax implications.

Personal Investment Company (PIC)

  • is a tax efficient vehicle in which to accumulate wealth;
  • a PIC should be considered as a long-term investment strategy;
  • can hold any asset class;
  • taxed in the same way as any UK company so all income and gains subject to UK corporation tax at 20% (falling to 19% from April 2017 and 17% from April 2020) - compared with top individual tax rate on income of 45% and on gains of 28% and trust rate of 45%. This can mean that the PIC potentially has over 20% extra income to reinvest compared with an individual investor;
  • gains will be subject to tax at 20% but PIC can claim indexation allowance when calculating gains;
  • investment management fees will be a deductible expense in calculating the PIC’s taxable profits. An individual investor cannot deduct such fees in calculating his taxable income;
  • rental losses can be set off against other income.

A PIC is a tax-efficient way of growing wealth for your heirs while retaining control.

Read more about extraction of funds and a comparison of UK taxation.

Download our guide >

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