What this post is. A labels piece. FIC, HoldCo, SPV and investment company are commercial use-case labels for one legal form — the UK private company limited by shares. Same Companies Act spine, same corporation-tax regime, same filing destinations. What differs is what they’re for.

The labels companies use for themselves — Family Investment Company, holding company, SPV, investment company — sound like different kinds of business. They’re not. Every one of them is a UK private company limited by shares under the Companies Act 2006: same legal form, same corporation-tax regime, same filing destinations at Companies House and HMRC. What differs is the job the company does — what it holds, who owns it, how the shares are structured, what its balance sheet looks like. The label sits on the use, not on the entity. This post walks the distinctions, because the distinctions matter — just not in the way the labels suggest.

In brief:

  • Family Investment Company (FIC), holding company (HoldCo), Special Purpose Vehicle (SPV), investment company and trading company with surplus cash are commercial use-case labels — not legal forms.
  • All are UK private companies limited by shares under the Companies Act 2006 — one legal form, one corporation-tax regime, one set of filing destinations (Companies House and HMRC).
  • What differs is purpose, ownership structure, balance-sheet shape and activity pattern — not the underlying legal entity.
  • The labels matter for how the company is described commercially and how owners think about it; they do not create distinct tax regimes by themselves.
  • Tax consequences come from what the company does and holds — investment-business status, close-investment-holding-company status, dividend-exemption eligibility — not from the label on the cap-table document.

Companies Act 2006 s.3 establishes that a company is “limited by shares” where the liability of its members is limited by the constitution to the amount unpaid on their shares. CA 2006 s.4 then makes the private/public distinction: a private company — in the Companies Act sense — is, residually, any company that is not a public company, a public company being one whose certificate of incorporation states it is public and which meets the allotted-share-capital requirement. Every in-scope variant occupies that single private-company category.

A company in that category is formed when one or more persons subscribe to a memorandum and comply with the registration requirements (CA 2006 s.7). Companies House issues a certificate of incorporation and a registered number. The company must have at least one director (CA 2006 s.154). Its accounts go to Companies House; its corporation-tax return goes to HMRC. A FIC, a HoldCo and an SPV all follow that exact same path — because they are the same legal form.

None of this is obvious from the names. In everyday usage “FIC” carries connotations of succession-planning sophistication; “SPV” sounds like a financing instrument; “HoldCo” sounds like something structurally distinct from a pure investment vehicle. The connotations are earned — each label does signal something real about purpose and structure — but the connotations are not legal distinctions. They describe different uses of the same company.

Does the label change the tax position?

No — but it is a reasonable question, because some of the labels correlate with tax consequences that do apply.

A Family Investment Company is almost always a close investment-holding company (CIHC) for corporation-tax purposes, which means a 25% corporation-tax rate applies regardless of profit level. A trading company with surplus cash is probably not a CIHC, which means it may qualify for the small-profits rate or marginal relief. An SPV holding a single investment might have no employees and a very thin balance sheet — which affects its FRS framework and filing obligations but not the underlying tax regime.

The point is that those tax consequences flow from what the company does and holds, not from the label. CIHC status is a determination made under the tax code — a consequence of the company’s activity and share structure, not of what anyone calls it. The investment-business or trading-company question turns on the same facts. So does eligibility for the dividend exemption on income received. The label is descriptive. The tax analysis starts from the facts.

This matters in practice because a company can be called one thing and have the tax profile of another. A company marketed as a “family investment vehicle” might fail the CIHC analysis. A HoldCo with a significant trading subsidiary might be closer to a trading company for some purposes than its label suggests. The label helps orient a conversation; it does not settle the analysis. That analysis is covered in the investment-business determination — the question the tax code actually asks — and, where the company is a trading business with an investment portfolio alongside, in surplus cash in a trading company.

The variants, each in turn

Pure investment company

A pure investment company exists solely to hold a portfolio. Its income is dividends, interest and chargeable gains. Its balance sheet is dominated by investments — listed equities, funds, bonds — plus broker cash and a modest amount of other assets; on the liability side, share capital, retained earnings and possibly a small amount of accruals. It has no employees in the usual sense, no operating business, no trade.

Owners typically call this “the investment company” or, if it is one of several vehicles in a structure, simply “the investment SPV”. Tax position: the investment-business question is straightforward (this company does nothing but invest); CIHC status depends on share structure and shareholder profile but is common; dividends received are generally exempt under the corporation-tax dividend-exemption rules; gains on listed equities run through the chargeable-gains regime.

Family Investment Company (FIC)

A Family Investment Company — as Deloitte Taxscape describes it — is a flexible investment vehicle “used to hold and grow family wealth” and as an alternative to trusts for wealth management and succession planning (Deloitte Taxscape, Family Investment Companies). Its distinguishing feature is the share structure: multiple classes of shares that separate economic rights from voting and control rights, designed to allow family wealth to accumulate in the company while founders retain control and future generations hold economic interests.

A FIC’s balance sheet looks much like a pure investment company’s: investments, broker cash, retained earnings. What is different is the shareholder register and the articles of association — the multi-class structure that makes the company useful for succession purposes. That structure does not make it a different legal entity; it is the ordinary private-company architecture put to a deliberate purpose.

Tax position: most FICs are CIHCs — the share structure and the close-company character together typically satisfy the CIHC conditions, meaning the 25% main rate applies. Dividend income is normally outside the corporation-tax charge under the dividend-exemption rules. Capital gains run through the chargeable-gains regime. For FIC owners and their accountants, the live management questions tend to be distributable reserves — how much of the portfolio appreciation can be paid out as a dividend — and the interaction between the FIC and other family entities.

Holding company (HoldCo)

A holding company is a company whose primary balance-sheet assets are shares in subsidiaries — operating businesses, other holding companies, or a combination. The HoldCo structure is a well-established corporate architecture: the holding company owns the subsidiaries; the subsidiaries carry on trade or hold assets.

A HoldCo’s balance sheet therefore looks quite different from a pure investment company’s. The dominant assets are typically shares in subsidiaries recorded as investments; there may be intercompany receivables and payables; alongside subsidiary holdings there may be a surplus-cash or investment portfolio. That portfolio — listed equities, funds, bonds, cash — is in scope for Portive’s approach to investment accounting; the subsidiary holdings themselves are a different accounting category.

Tax position: whether a HoldCo is a trading company or an investment business is a more nuanced determination than for a pure investment company, because the nature of its subsidiaries and the group’s overall activity pattern both matter. A HoldCo at the top of a trading group is usually treated differently from a HoldCo holding only passive investment subsidiaries. CIHC status, the dividend exemption on dividends from subsidiaries, and the availability of the substantial-shareholding exemption at disposal are all relevant questions — and all follow from the facts of what the HoldCo holds and does, not from the label.

Special Purpose Vehicle (SPV)

A Special Purpose Vehicle — at least in the investment context — is a company formed to hold one specific thing: a single investment, a defined parcel of assets, or a specific portfolio. The single-purpose character is the point: the SPV isolates a particular asset or transaction from the other entities in a structure.

An investment SPV’s balance sheet is thin. Typically one holding — or a narrow set — matched in many cases by borrowings used to finance the acquisition, with minimal other assets or liabilities. Activity is sparse: an acquisition at the start of the SPV’s life, holding income as the investment generates returns, and an eventual disposal. Some SPVs have very long first accounting periods — a consequence of their formation timing — which creates a specific filing pattern (a long period of account is split into two corporation-tax accounting periods).

Tax position: as with the other variants, CIHC status and investment-business or trading-company character follow from what the SPV holds. The thin balance sheet and sparse activity make the analysis relatively clean in most cases. The accounting framework applicable to an SPV — whether it qualifies as a micro-entity under FRS 105 or falls under FRS 102 — will depend on its size, and in particular whether the balance-sheet total exceeds the micro-entity threshold.

Trading company with surplus cash

A trading company with surplus cash is a different animal: its primary activity is a trade, and the investment portfolio is secondary — accumulated retained profits deployed into investments rather than left in a current account or returned to shareholders.

Its balance sheet is therefore mixed: trading assets and liabilities on one side; a portfolio of listed equities, bonds, cash and funds on the other. The trade is out of Portive’s scope; the investment portfolio is in. The company’s activity pattern is the most complex of the variants because broker activity interleaves with trading cash flows and operational accounting — the portfolio can be an afterthought in systems designed for the trade.

Tax position: the investment-business versus trading-company analysis is most consequential here. A trading company’s surplus cash is generally not CIHC-territory, meaning it may benefit from the small-profits rate or marginal relief. But the management-expenses question — whether costs attributable to managing the portfolio are deductible as management expenses of a company with investment business — can be less clear when a trade sits alongside. This is the territory surplus cash in a trading company covers in depth.

What the labels are actually for

None of this means the labels are meaningless. They carry real information about purpose and structure. When an accountant says “this is a FIC,” they are signalling multi-class shares, succession intent, and the CIHC rate. When a lawyer says “we’ll use an SPV,” they are signalling single-asset isolation and thin governance. The labels are shorthand — economical, useful, widely understood.

The point is that the shorthand does not create legal or tax distinctions that have to be built around. Because every variant is the same private company limited by shares, a single product approach — one legal-form engine, one corporation-tax spine, one filing path — works across all of them. What varies is configuration: the share structure, the activity pattern, the balance-sheet shape, the entity-level tax determinations. Those variations are substantial, but they are variations on one form, not different forms.

For the accountant preparing accounts and a corporation-tax schedule, that means the regime analysis starts from the facts, not the label. For the owner trying to understand what their company does for tax purposes, it means the name on the cap-table document is a starting point, not an answer. The year-end picture — the unified treatment across all of these variants — is where the regime details converge.

Sources

Legislation

  • Companies Act 2006 s.3 — Limited and unlimited companies; liability limited by shares. legislation.gov.uk
  • Companies Act 2006 s.4 — Private and public companies; the residual definition of a private company. legislation.gov.uk
  • Companies Act 2006 s.7 — Method of forming a company; subscription to a memorandum; registration. legislation.gov.uk
  • Companies Act 2006 s.154 — Companies required to have directors; minimum one director for a private company. legislation.gov.uk
  • Companies Act 2006 ss.441, 442 — Duty to file accounts and reports; period allowed for filing. legislation.gov.uk — s.441; s.442

Government guidance

  • gov.uk — Business legal structures — high-level overview of UK business legal forms, including private limited companies. gov.uk/business-legal-structures

Commentary

  • Deloitte Taxscape — Family Investment Companies — descriptive market-practice commentary on FIC purpose, share structure and corporation-tax position. taxscape.deloitte.com/article/family-investment-companies.aspx. Cited as commentary, not as authority on the legal-form or tax-regime claim (those rest on CA 2006 and the CT legislation).

Last reviewed: 2026-06-01.