Investment in UK Films & UK Film Industry
Investment in UK Films Disclaimer
The information contained within this web page is designed to provide information only and does not constitute any investment , tax or legal advice or offer to invest in any fund contained therein
Investment in UK Films
The case for Investment in UK Films & UK Film Industry
Investment in UK Films is the archetypal High Risk, High Reward scenario and rarely recommended for the novice investor. However, with the potential for vast tax free profits and unlimited upside, the risk can be worth taking. While only 30% of UK films make a profit and return profits to the investors, the profits on that 30% far outweigh the 70% that don’t return profits.
The fabled ‘Kings Speech’, released November 26, 2010, cost $15Mn to make and to date has returned $414,211,549 in 2015, 2,761% ROI, of which $104Mn came back to investors. Now returns like these don’t come along every five minutes but there are good profits to be had each year. The High Rewards outweigh the High Risks!
2014 generated a total spend of £1.471 billion in 2014, a 35% increase on 2013 and a record figure. Approximately 50% of this would have come from private equity investment.
Simple, pick a commercially viable film. Films can be differentiated by factors as diverse as budgets, genres, experience of cast and crew, distributors and the quality and experience of the production team. Investment in UK Films risk can be mitigated by analyzing the same factors. Common sense due diligence goes a long way, but seek an expert.
Investment in UK Films – Loss Relief
Should your investment return no profits, it classes as a loss under both EIS & SEIS. You can offset that loss against income tax.
- For example, should you lose your entire £10,000 investment.
- Income tax relief comes to the rescue and reduces your actual loss to only £7,000 (£10,000-£3,000).
- You can reduce your taxable income for the year in which you disposed of the shares by £7,000, resulting in a saving of £2,800 (40 per cent of £7,000) for a higher-rate taxpayer.
- Alternatively you might choose to offset your loss against other capital gains in the normal way.
CGT & Loss Relief
For investors who realised capital gains during the 2013/14 tax year, SEIS reliefs allow you claim up to:
- 78% of your investment back if the startup succeeds – and you pay no CGT when you sell your shares;
- 100.5% of your investment back if the startup fails – allowing you to invest in startups with the potential of full downside protection.
If you realised capital gains during the 2014/15 tax year, SEIS and related reliefs allow you claim up to:
- 64% of your investment back if the startup succeeds – and you pay no CGT when you sell your shares;
- 86.5% of your investment back if the startup fails – significantly reducing any losses you incur when investing in startups
No ones wants an investment to fail, but it’s nice to have some of the bitterness removed by loss relief.
Invest under UK Government/HMRC Approved Tax Relief schemes (EIS & SEIS)
All of Itasca’s films qualify for the SEIS/EIS combination of Tax Relief Schemes. We gain the HMRC Advanced Assurance Approval Certificate for SIES/EIS status, prior to asking for asking any investment.
Investors should always seek qualified and FCA approved investment advice and Itasca can only accept investments through qualified IFAs, Accountants or other investment agents. This ensures all the restrictions and rules are applied to ensure your investment is fully qualified for the SEIS/EIS tax relief over the full three year term of the investment.
The Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) are government initiatives offering some of the most attractive tax breaks available in the UK.
To access them, an investor must invest in the shares of a small, unlisted company. Small means 250 employees or less, and maximum gross assets of £15 million (before the investment). Unlisted means that the company is not quoted on a major stock market.
Obviously, investing in small companies is generally riskier than buying shares in giant Blue Chip Companies. And the fact that the companies are not listed on the stock market means that there’s no easy way to sell your shares.
But small companies can grow very quickly because they are coming from a low base. With a small company, you’re more likely to lose your money, but you’re also more likely to make double, treble, or an even bigger multiple of the amount you invested.