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 level of wealth.
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 costs them hundreds of thousands.
A founder 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.
What's Inside
- Separate operating from investment assets: If your business gets sued, investment wealth should be untouchable in a separate holding company
- FICs change the tax maths: 25% corporation tax versus 45% personal income tax — on £500K annual profit, that £100K difference compounds substantially over decades
- Offshore structures rarely help UK or US residents: Anti-avoidance rules eliminate the tax benefit, but add unnecessary complexity, reporting burden, and professional fees
- The planning window is 12–18 months before exit: After exit, options narrow fast and restructuring costs spike significantly
- Start simple, scale with complexity: Holding company at £5M+, consider trusts at £20–30M+ with specific circumstances — if you can't draw your structure on one page, complexity has outrun purpose
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 a UK resident, you pay UK tax on worldwide income regardless of where your companies are registered. Same for US citizens.
Founders spent a lot of 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.
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 costs often exceed the benefits. 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 ring-fence liability in a larger deal, especially in real estate or direct investments in operating companies. But don't go overboard. Some founders end up with 15 SPVs for relatively small positions, drowning in paperwork. Each one needs its own compliance, filings, and bank account. If the investment is under £500K and doesn't carry meaningful liability risk, you probably don't need a dedicated SPV.
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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 through a loan), it invests, and profits are taxed at corporate tax rates rather than personal income tax rates.
The tax math is significant. Corporation tax is 25% for companies with profits over £250,000 and 19% for those with profits of £50,000 or less, with marginal relief in between; a close investment-holding company, which many family investment companies are, pays 25% whatever its profits. Compare that to the 45% personal income tax rate 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 and compounds.
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 behaviors." 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 Math 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 is levied on profits earned by 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: a company's income is subject to corporation tax. When you extract it as dividends, you pay income tax again. Structure determines the combined rate.
Let me make this concrete.
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 rate of 25%, 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 a £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 skeptical. 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 the cracks.
Offshore Myth
This comes up constantly, so let me be direct.
Offshore structures do not reduce tax for UK or US residents.
A BVI company owned by a UK resident rarely escapes UK tax. There's no magic. Anti-avoidance rules, including the controlled foreign company and transfer of assets abroad rules, have closed these doors.
Here's how those rules work: if you're a UK resident and control a foreign company, its income can be taxed in the UK as if it were yours (the transfer of assets abroad rules do this for individuals; the controlled foreign company rules do the same for UK companies with foreign subsidiaries). The company's offshore location becomes irrelevant for tax purposes. You get all the complexity of an offshore structure with none of the benefits.
The US has similar rules through Subpart F and the GILTI regime (renamed net CFC tested income from 2026), 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 funds from LPs in five different countries, a Cayman structure means no additional 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 of physical presence in a 12-month period, or 90+ days if you're a UAE/GCC national with a permanent residence and center of financial interests there. It's not a structure play. It's a lifestyle decision.
Some founders arrange Dubai residency while still basically living in London. A few business trips and a rented apartment don't make you a UAE tax resident. The UK will still tax you on worldwide income unless you've genuinely relocated—and can prove it.
Founders spend $100K+ setting up elaborate offshore structures that provide 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). Separate the 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 worth serious consideration for inheritance tax planning. Maybe some international elements if your life genuinely spans jurisdictions. You need proper coordination at this level—there are too many pieces for casual oversight.
£50M+: Full infrastructure. Professional management 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—anti-avoidance rules bring the income into UK tax anyway. Now there's an offshore entity to maintain, report on, and explain to HMRC—with zero benefit.
Complexity before it's needed. Trusts make sense above £20–30M, with specific circumstances (e.g., 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.
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, and 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.
Common questions
What's the most important structure principle?
Keeping operating activities separate from investment assets. Operating companies face risks such as customer lawsuits, employee disputes and contract or regulatory problems, so the typical set-up is a holding company that owns the investments and a separate operating company for business activity, including consulting, board seats or new ventures. If the operating company is sued or fails, the investments sit in a different entity. Rules vary by country and change often, so how much protection this gives is a question for a lawyer who knows your situation.
What's a Family Investment Company and why do UK founders use one?
A Family Investment Company (FIC) is a UK private limited company that holds investments rather than trading. The main draw is that its profits are taxed at corporation tax rates, with a main rate of 25%, rather than at personal income tax rates of up to 45% (higher in Scotland): on £500,000 of profit, that leaves £100,000 more in the company to compound, though dividends paid out to family members are taxed again. Tax rules vary by country and change often, so the detail is a question for a tax adviser who knows your situation.
Do offshore structures reduce tax for UK or US residents?
Generally not. UK anti-avoidance rules, such as the transfer of assets abroad rules and the controlled foreign company rules, can bring the income of an offshore company back into the UK tax net when UK residents own or control it, and the US has similar rules for foreign companies controlled by US shareholders. That leaves the complexity, reporting and professional fees of an offshore structure without the tax benefit. Tax rules vary by country and change often, so the detail is a question for a tax adviser who knows your situation.
When does adding structure make sense?
When the benefit clearly exceeds the cost, and not before. This playbook's rough guide is that a holding company can become worthwhile from about £5M in liquid assets or ahead of a significant exit, and trusts from about £20–30M in specific circumstances, such as complex family situations or clear succession planning needs. Many founders at £5–25M need less structure than they think. Tax rules vary by country and change often, so the detail is a question for a tax adviser or lawyer who knows your situation.
When is the best time to plan structure?
Ideally 12–18 months before a liquidity event such as an exit. Before liquidity, structures can be set up, shares reorganised and trusts funded, often with minimal tax consequences, because the value hasn't crystallised yet. Afterwards, options narrow fast: moving assets between structures can trigger tax, and restructuring costs rise sharply. Tax rules vary by country and change often, so the detail is a question for a tax adviser who knows your situation.
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