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.