Chapter 3 of Running a Family Office Under $100M
Structure is where most founders get it wrong.
Some overcomplicate. They hear about offshore trusts, holding companies in Luxembourg, multi-layered arrangements with entities in three jurisdictions. Sounds sophisticated. They implement it. Now they're paying $50,000+ a year in maintenance for structures that do nothing useful at their wealth level.
Others oversimplify. Everything stays in their personal name because "it's easier." Then they sell a business, face a lawsuit, or try to pass wealth to their kids—and discover that simplicity cost them hundreds of thousands.
A founder who kept everything personal through a £15M exit. No holding company, no separation, nothing. Clean and simple, he figured. Then his next venture got sued. Because he'd never separated his investment assets from his operating activities, the plaintiff's lawyers went after everything. What should have been a contained business problem became a threat to his entire net worth.
The right approach sits in between. Structure should match your actual complexity. Not more, not less.
Start With Three Questions
Before thinking about entities and jurisdictions, figure out where you actually are.
Where do you operate? A UK founder with UK customers and UK investments needs different structures than someone with US venture investments, a Dubai company, and European property. More jurisdictions mean more structural complexity. That's just reality.
Where do you live? Tax residency is the anchor. And this is where people get tripped up: you can't escape your home country's taxes through clever structuring. If you're UK resident, you pay UK tax on worldwide income regardless of where your companies are registered. Same for US citizens.
I've watched founders spend serious money setting up offshore entities, thinking they'd reduce their tax bill. They didn't. They just added complexity, reporting headaches, and professional fees—with zero tax benefit. We'll come back to this.
What's your liquidity timeline? This matters more than most people realise. Before a liquidity event, you have flexibility. Structures can be established, shares reorganised, trusts funded—often with minimal tax consequences. The value hasn't crystallised yet.
After liquidity? Options narrow fast. Moving assets between structures triggers tax events. What could have been done cleanly before is now expensive or impossible.
If you're approaching an exit, structure planning should happen 12–18 months beforehand. Not after the wire hits. The most expensive advice founders receive is often: "We could have saved you £500K if you'd come to us a year earlier."
Don't be that founder.
The One Principle That Matters Most
I could walk through every type of entity—holding companies, operating companies, SPVs, trusts—and explain what each one does. But honestly, most of that detail only matters once you've internalised one principle:
Keep your operating activities separate from your investment assets.
Operating companies face operating risks. Customer lawsuits, employee disputes, contract problems, regulatory issues. If your operating activities and investment wealth sit in the same structure, a problem in one threatens the other.
The architecture should look like this: You personally own a holding company that holds your investments. Separately, you own an operating company for any business activities. If the operating company gets sued or fails, your investment assets remain protected.
This matters especially for founders who stay active after an exit. Consulting, board seats, advising startups, new ventures—that stuff should run through an operating entity. Not through the same structure holding your liquid wealth.
A holding company, at its simplest, is just a company that holds things. Investments, fund commitments, shares in other companies, property. Instead of personally owning 30 different investments, you own one company that owns 30 investments. Makes administration simpler, estate planning cleaner, and creates a layer between you and the assets.
Worth setting up once you have £5M+ in liquid assets or are approaching a significant exit. Below that, the administrative cost often exceeds the benefit. For UK residents, the Family Investment Company (FIC) has become the standard structure. US founders typically use Delaware or Wyoming LLCs.
SPVs—special purpose vehicles—are single-purpose entities for individual investments. Useful when you want to ringfence liability on a larger deal, especially real estate or direct investments in operating companies. But don't go overboard. I've seen founders with 15 SPVs for relatively small positions, drowning in paperwork. Each one needs its own compliance, filings, bank account. If the investment is under £500K and doesn't carry meaningful liability risk, you probably don't need a dedicated SPV.
The Family Investment Company (FIC)
Since FICs have become so common for UK founders, worth explaining what they actually do.
A Family Investment Company is a UK private limited company set up to hold investments rather than trade. The structure is straightforward: you fund the company (usually by loan), it invests, and profits are taxed at corporation tax rates rather than personal income tax rates.
The tax maths is significant. In 2025, corporation tax is 25% on profits over £250,000 (19% on the first £50,000). Compare that to personal income tax at 45% for additional rate taxpayers. If your investments generate £500,000 in profit, that's £125,000 in corporation tax versus £225,000 in personal income tax. The £100,000 difference stays in the company, compounding.
There's also an inheritance tax angle. Unlike trusts, which trigger an immediate 20% IHT charge on transfers above the nil-rate band (£325,000), FICs can be structured so that shares given to family members qualify as potentially exempt transfers—completely IHT-free if you survive seven years.
HMRC investigated FICs in 2019, specifically looking at whether they were being used for aggressive tax avoidance. In August 2021, they disbanded the investigation unit, concluding there was "no evidence to suggest that there was a correlation between those who establish a FIC structure and non-compliant behaviours." FICs are now treated as business as usual.
Setup costs range from £4,500 to £21,000 depending on complexity (alphabet shares, growth shares, trust ownership). Ongoing costs are modest—annual accounts, corporation tax return, company filings. Maybe £3,000–£5,000 per year for a straightforward structure.
By 2021, over 10,000 FICs had been registered with Companies House. The number has grown significantly since.
Tax: The Maths That Actually Matters
Tax planning sounds dry. But it's where serious money gets made or lost.
I'll spare you the technical details. What matters is understanding how different taxes interact and compound over time.
Three taxes are in play. Corporation tax hits profits earned inside companies. Capital gains tax hits you when assets are sold. Income tax hits money that actually reaches you personally—salary, dividends, interest.
The key insight: income earned in a company faces corporation tax. When you extract it as dividends, you pay income tax again. Structure determines the combined rate.
Here is an example.
Say your investments earn a 10% return. If that's taxed at 45% (which can happen with poor structure), you keep 5.5%. If properly structured at an effective 25% rate, you keep 7.5%.
Two percentage points difference. Doesn't sound like much.
Now compound it. £10M over 20 years:
- At 5.5% net: £29.2M
- At 7.5% net: £42.5M
That's £13M difference. Not from picking better investments. Not from timing the market. Just from how income flows through entities.
This is why structure matters as much as investment returns. Sometimes more.
I'm not talking about aggressive schemes. Those tend to end badly. HMRC has seen everything. If someone promises dramatic savings through something you don't understand, be sceptical. Legitimate planning means holding assets in the right entity type, timing income recognition sensibly, using reliefs that are actually available to you, and making sure your advisors coordinate so nothing falls through cracks.
The Offshore Myth
This comes up constantly, so let me be clear.
Offshore structures do not reduce tax for UK or US residents.
A BVI company owned by a UK resident is taxed as if it were a UK company. There's no magic. The Controlled Foreign Company (CFC) rules have closed these doors.
Here's how CFC rules work: if you're UK resident and control a foreign company (broadly, own more than 25% with overall UK control exceeding 50%), its profits can be attributed to you and taxed in the UK. The company's offshore location becomes irrelevant for tax purposes. You get all the complexity of an offshore structure with none of the benefit.
The US has similar rules through Subpart F and GILTI provisions, arguably even stricter.
So why do offshore jurisdictions exist? They serve real purposes—just not personal tax reduction for onshore residents.
Cayman and BVI are popular for fund structures because they're neutral ground for international investors. If you're raising fund with LPs from five different countries, a Cayman structure means no extra tax layer at the fund level. That matters for fund managers. It doesn't matter for your personal wealth.
Dubai gets attention because of zero personal income tax. But that requires genuine residency—the UAE Federal Tax Authority requires 183+ days physical presence in a 12-month period, or 90+ days if you're a UAE/GCC national with a permanent residence and centre of financial interests there. It's not a structure play. It's a lifestyle decision.
I've seen Dubai arrangements challenged because the founder still basically lived in London. A few business trips and a rented apartment doesn't make you UAE tax resident. The UK will still tax you on worldwide income unless you've genuinely relocated—and can prove it.
I've saw people spend $100K+ setting up elaborate offshore structures that provided no benefit whatsoever. Just complexity, reporting requirements (CFC documentation, anti-avoidance disclosures), and professional fees. They got sold sophistication they didn't need.
Most of your structure will be onshore—UK entities if you're UK resident, US entities if you're US-based. That's fine. That's normal. The opportunity isn't in exotic jurisdictions. It's in getting the basics right.
Complexity Should Match Wealth
How much structure do you actually need?
£5–10M: Keep it simple. One holding company (likely an FIC for UK residents). Separately, an operating company, if you're still doing business activities. Single jurisdiction. Basic separation. That's probably enough.
£10–25M: Same foundation, possibly add trusts if succession planning warrants it. SPVs for larger individual deals where liability ringfencing matters. Don't add complexity unless there's a clear reason.
£25–50M: Multi-entity structure probably makes sense now. Trusts are worth serious consideration for inheritance tax planning. Maybe some international elements if your life genuinely spans jurisdictions. You need proper coordination at this level—too many pieces for casual oversight.
£50M+: Full infrastructure. Professional management is essential.
The through-line: add complexity when the benefit clearly exceeds the cost. Not before. Not because it sounds sophisticated. Not because your advisor recommends it and you don't want to seem unsophisticated by pushing back.
Mistakes Worth Avoiding
Offshore for onshore residents. Founder sets up BVI company thinking it reduces UK taxes. It doesn't—CFC rules attribute the income to UK tax anyway. Now there's an offshore entity to maintain, report on, explain to HMRC—with zero benefit.
Complexity before it's needed. Trusts make sense above £20–30M with specific circumstances (complex family situations, clear succession planning needs). At £8M, you're paying £20K+ annually for something that doesn't serve a real purpose yet. That money could be invested.
Tax tail wagging the dog. Refusing to sell an investment because of capital gains tax—even when selling is clearly right. Turning down opportunities because the structure isn't "optimised." A slightly higher tax bill beats a missed opportunity or a failed transaction.
Letting advisors build empires. Some advisors recommend complexity because complexity generates fees. More entities, more filings, more billing. Always ask: what happens if I don't do this? What's the simpler alternative?
Post-exit planning. Waiting until after liquidity to think about structure. By then, the good options have closed. The window is 12–18 months before exit. After that, you're managing consequences rather than creating opportunities.
What to Actually Do
When someone recommends a structure, ask what specific problem it solves. Get actual numbers on setup and ongoing costs. Ask what happens if you don't do it. Push for simpler alternatives.
Good advisors welcome these questions. If someone gets defensive or vague, pay attention to that.
And honestly? Most founders at £5–25M need less than they think. A holding company (probably an FIC), an operating company if you're active, proper documentation, sensible tax planning. That covers a lot of situations.
The goal isn't the most sophisticated structure. It's the right structure for where you actually are—one that can evolve as circumstances change.
If you can't draw your current structure on a single page and explain why each piece exists, something has probably gone wrong. Either unnecessary complexity has accumulated, or you don't fully understand what you own. Neither is good.
