ISA Consortium

If you've spent any time talking to other construction owners, you've probably heard someone mention setting up a holdco. Or a Family Investment Company. Or a group structure.

Most of the time, it's a solution looking for a problem.

Some of the time, it's exactly what's needed.

Here's a rough framework for thinking about it.

A holdco (group structure with a parent company owning the trading company) typically becomes worth considering when:
✅ You're planning to extract significant cash from the trading business and reinvest in other assets (property, second trading company, investment portfolio)
✅ You want to ring-fence trading risk away from accumulated wealth
✅ You're building toward a future sale and want flexibility in how the deal is structured
✅ You have multiple business interests that benefit from sharing services or being held together

A Family Investment Company (FIC) typically becomes worth considering when:
✅ You're building serious long-term family wealth (typically £1M+ to invest)
✅ You want to involve adult children in ownership while keeping control
✅ Inheritance tax planning is a major factor
✅ You're comfortable with the additional admin and the long-term commitment

When they DON'T make sense:
❌ You don't have significant cash being extracted to reinvest yet
❌ You're not yet building wealth outside the business
❌ You're hoping it will magically reduce your tax bill on current income (it usually won't)
❌ Your accountant suggested it but couldn't clearly explain what it'd do for you

These structures add cost, complexity, and admin. They're worth it when they solve a real problem. They're not worth it as status symbols.

The right time to consider them is usually when you've got £200K+ of surplus cash being extracted annually that you want to do something with, and exit planning is moving from abstract to specific.

Reminder: this is general framework, not personal advice. Proper tax advice on your specific situation is essential before any restructuring.

Comment STRUCTURE below for the holdco vs FIC decision framework we use with clients.

How do you actually take income from the business?

Honest question for the construction directors reading 👇

How do you currently take income from the business?

🅰️ Salary at minimum, rest as dividends
🅱️ Salary at a higher level, dividends on top, no pension
🅲️ Salary, dividends, and pension contributions structured together
🅳️ Honestly, I take what I need and the accountant sorts it at year-end

There's no objectively right answer (it depends on your wider circumstances). But each option tells a different story.

A is the 'classic' setup. Works well at small turnover but often becomes inefficient as profit grows.

B leaves the biggest tax-efficient lever on the table (pension).

C is what most well-advised directors end up doing.

D is the most common, and almost always the most expensive over time. The accountant 'sorting it at year-end' usually means the structural inefficiency is locked in, not fixed.

A, B, C or D in the comments.

Generic construction finance advice often falls apart when applied to groundworks and civils. The financial dynamics are different in ways that matter

Here's what makes groundworks finance its own thing.
1. Programmes are months, not weeks.
A typical groundworks package runs 6 to 18 months. A civils project can run 2 to 3 years. That means commitment to plant, labour and overhead is locked in for periods most construction firms never see. When something goes wrong, you're committed before you know it.

2. Plant is a balance sheet, not an expense.
Owned plant ties up serious capital. Hired plant comes with rates that swing with utilisation. The question 'should we buy or hire?' is one of the biggest financial decisions in the sub-sector, and most firms answer it on gut feel rather than utilisation maths.

3. Prelims are 15 to 25% of contract value, and disappear if you're not careful.
Site setup, welfare, security, plant standing time, supervision, traffic management. Most groundworks owners price prelims in, then watch them get eroded by programme slippage, scope creep, and inadequate recovery on variations. Prelim leakage is one of the biggest hidden margin killers.

4. Retentions stack across years.
On a fit-out, retentions might tie up £20K to £40K for 12 months. On groundworks, a single firm can easily have £200K to £500K tied up across multiple projects, some 2 to 3 years old. Without active retention management, this becomes the equivalent of an interest-free loan to your clients, indefinitely.

5. Disputes are bigger and slower.
Adjudication, arbitration, dispute resolution. Groundworks disputes are usually larger in value and take longer to resolve than other sub-sectors. The financial exposure during a dispute is genuinely material.

What this means in practice:
✅ Long-horizon cash forecasting, not 13-week
✅ Plant utilisation tracked as a KPI, not an afterthought
✅ Active retention register, reviewed monthly
✅ Prelim recovery built into project reviews
✅ Dispute provision held against the P&L, not ignored

Most £750K to £55M groundworks firms are run on the same finance system as a fit-out firm of similar turnover. The mismatch costs 3 to 6 points of net margin every year.

Message us GROUNDWORKS for the finance review.