Can I have a partnership and an FIC at the same time

The short answer to this question is yes. Family investment companies and limited liability partnerships are separate legal entities for tax purposes

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The short answer to this question is yes. Family investment companies and limited liability partnerships are separate legal entities for tax purposes – they are both taxed separately and individually.

Generally, the requirement for limited liability partnership exists for landlords who are trying to move properties held personally into a Family investment company in order to avoid IHT and not pay stamp duty and capital gains tax on the transfer.

Sometimes landlords need income from their property portfolios and in this case it’s more tax effective for the income to come out of a limited liability partnership rather than a Family investment company.

If you are a basic rate tax payer then you will pay 20% tax rate on the partnership income while if it’s in a company, you will pay up to 25% corporation tax and dividend tax which may be 8.75% or whatever the tax rate is at the time.

Retaining some properties in a partnership has the benefit of reducing the income tax but it has the negative impact of the assets still being in the estate as far as IHT is concerned. It is a matter of balancing what you need for income and income tax purposes and the IHT issues.

Property held in a partnership is still in your estate because it cannot be given away while retaining the income and therefore it’s still liable to inheritance tax. Within the Family Investment company, it is possible to give the shares away while retaining the income.

A limited liability partnership and a Family investment company can be held at the same time and sometimes it’s very beneficial to do exactly that.

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