Unlimited vs limited liability in Family Investment Companies (FICs): privacy, protection and planning in 2026

Family Investment Companies (FICs) continue to grow as a core planning tool for UK high net worth (HNW) and ultra-high net worth (UHNW) families, reflecting shifting tax landscapes and more complex family governance needs.

There has been growing use of FICs as a multi-generational planning tool since significant changes to the taxation of trusts were announced back in 2006.

Combined with the changes to inheritance tax (IHT) from April 2026, recent interest in corporate‑based succession structures has accelerated, with families looking for control, flexibility, and long‑term intergenerational planning solutions.

Previously we’ve explored FICs in a broader sense and how they work, while the focus for this article is on the options of incorporation and whether your FIC would be best suited as a limited or unlimited company. Making the correct structure choice from the outset is imperative as it isn’t just a legal formality, it shapes privacy, lender choices, succession governance and public profile.

A reminder – what is a Family Investment Company?

A FIC is a private company established to hold and manage family wealth, typically including assets such as cash, equity portfolios, funds, or property, for long‑term succession planning. FICs also allow parents or older generations to retain control while allocating assets to the next generation, bringing control, governance, and wealth transfer objectives together in one place.

FICs can be structured flexibly using multiple share classes, detailed shareholder agreements and bespoke Articles of Association, ensuring compatibility with family governance expectations. Funding typically involves equity subscriptions or shareholder loans, both of which are widely recognised features of FIC planning.

Unlimited or limited liability options exist for all FICs at incorporation. We look at both options in greater detail below.

Limited liability FICs: features, benefits and risks

Core features

A limited liability FIC provides a formal shield between a company’s liabilities and the personal assets of the shareholders. This makes it particularly suitable for families with:

• Higher‑risk or leveraged strategies,
• Exposure to external contracting, or
• Operational activities that introduce credit or counterparty risk.

Statutory filing duties

Limited companies must file annual accounts at Companies House, creating public visibility of the financial position and performance. These obligations remain consistent and comprehensive.

Suitability scenarios

A limited company structure is generally preferable where:

• The portfolio includes let property, private equity, alternative assets, or derivatives,
• Leverage is used,
• Borrowing from banks is anticipated (banks often prefer limited liability structures), and
• Reputational risk or regulatory obligations require a recognised corporate form.

Unlimited liability FICs: when privacy is more of a concern

Many unlimited companies don’t require filing of annual accounts at Companies House, making them one of the most discreet corporate structures available.

However, there is increased risk for shareholders as they have unlimited personal liability for the debts of the company, including past shareholders (under certain conditions).

Best suited for:

• Low‑risk portfolios (eg cash, gilts and high‑grade bonds),
• UHNW families whose priority is confidentiality over liability protection,
• Structures with no external borrowing or commercial counterparties, and
• Long‑standing family offices accustomed to private, internal governance.

Some families are increasingly selecting unlimited status to avoid the potential Companies House account reforms, which are expected to increase financial disclosures for limited companies from 1 April 2027, including mandatory profit and loss filings for smaller companies when reforms come into effect.

Common misconceptions about unlimited companies

Misconception 1: “Unlimited companies have tax advantages.”

This is incorrect, unlimited and limited FICs share identical corporation tax treatment; liability status is irrelevant for taxation.

Misconception 2: “Unlimited companies don’t require any details to be shared.”

While unlimited companies offer greater privacy by avoiding account filings, they still have basic statutory reporting requirements including core company details and information on persons with significant control (PSCs).

Misconception 3: “Unlimited companies avoid HMRC scrutiny.”

HMRC scrutiny applies uniformly to all FICs, regardless of liability status.

Comparing the two options

Tax considerations across both structures

Whether the FIC is limited or unlimited has no bearing on the company’s tax position, and all FICs will be subject to corporation tax on their investment returns. For more information, read our article on the potential tax benefits of a FIC.

Funding and tax triggers

Funding via loans can enable tax‑free repayment of principal without a tax charge in many cases, whereas transfers of assets or shares may trigger CGT and/or stamp taxes depending on the nature of the assets and transaction. Minority share valuations must be approached carefully, as HMRC may closely scrutinise the market value adopted.

Choosing the right liability structure

There are many considerations to take into account when choosing the structure of your FIC. The types of assets you hold with be a key deciding point, along with any requirements for bank loans. Arguably, two items at the top of the decision tree are privacy preferences (with unlimited liability offering greater confidentiality) and family governance, as voting rights, share classes and intergenerational control needs will differ between the two options.

To highlight these points, we note two fictional examples where a limited and unlimited company may be chosen depending on specific circumstances:

Example A: Higher‑risk, higher‑return strategy

A family office investing in private credit and alternative funds chooses a limited FIC to ring‑fence personal wealth. Lenders reviewing credit lines also prefer the limited structure.

Example B: Discreet UHNW bond portfolio

A fourth‑generation family with a multi-million government bond portfolio prioritises privacy and has no operational risk, selecting an unlimited company as this is the most suitable option.

How we can help

Assuming a FIC is the right choice for you, choosing between limited and unlimited liability is a strategic trade‑off between protection and privacy. For families engaging in higher‑risk investments or requiring lender interaction, limited liability is likely to remain the preferred option. For those prioritising discretion, along with low‑risk assets and no operational exposure, unlimited companies can be highly effective.

Planning decisions, including choosing a suitable FIC structure, should always align with the family’s long‑term governance requirements and wider plans.

We can help you evaluate which structure is most beneficial to your specific circumstances and advise on the wealth planning and tax implications of your selected option.

For further information, please get in touch with Lizzie Murray.