Investors there are many good reasons to invest in the UK film industry

As well as being a fascinating industry in which to become involved, a number of tax advantages have been made available for both individual and institutional investors. As well as making full use of these advantages on behalf of our investors, Gizmo Films seeks to work closely to keep all investors fully informed of the progress of our projects. We seek to make films in a cost effective way without compromising on quality, and our extensive contacts in suppliers of complementary investment streams, production, marketing and distribution ensure that whilst producing films of outstanding quality and integrity we maximise  the  opportunity to make our projects profitable.

The Enterprise Investment Scheme (EIS)

The Enterprise Investment Scheme offers wide range of tax breaks to UK investors. The EIS and SEIS (see below) schemes are now the only UK tax efficient schemes to offer Capital Gains Tax Deferral. The scheme also offers income tax relief at 30%, capital gains free growth and, through Business Property Relief, relief from Inheritance Tax if the shares are held for more than two years. It is anticipated that companies formed to fund individual films would be likely to qualify for this scheme.

These reliefs significantly mitigate the risk of investment:

  • Income Tax Relief – An individual can reduce their income tax liability by 30% of the amount invested in the EIS shares. The EIS qualifying investment must be held for no less than three years from the date of issue, or three years from commencement of trade. The minimum investment sum is £500 per Company and £500,000 per annum per investor.
  • Capital Gains Tax Relief – There is no capital gains tax charged on the gain in any sale of shares so long as the investor has held their shares for at least three years. In addition there exist arrangements to defer Capital Gains Tax liabilities due on gains resulting from other investments subject to qualifying periods. For more information contact us.
  • Inheritance Tax – Shares in the Company should qualify for 100% exemption from Inheritance Tax in the event of the death of the shareholder so long as the shares have been held for two years.

Loss Relief – If the investment does not succeed or the EIS shares are disposed of at a loss (after taking into account income tax relief), such loss can be set against the investor’s capital gains or taxable income in the year of disposal or the previous year.

Further information: www.hmrc.gov.uk/eis/

The Seed Enterprise Investment Scheme (SEIS)

This is a new (April 2012) scheme available for investments into start up businesses.  It has been indicated to Gizmo Films Productions by HMRC that the Company qualifies for this scheme.

  • Income Tax Relief – An individual can reduce their income tax liability by 50% of the amount invested in the SEIS shares.
  • Capital Gains Tax Relief – There is no capital gains tax charged on the gain in any sale of shares so long as the investor has held their shares for at least three years. In addition there exist arrangements to defer Capital Gains Tax liabilities due on gains resulting from other investments subject to qualifying periods. For more information contact us.
  • Capital Gains Tax reinvestment relief for 2012-2013.
  • Income tax loss relief on disposal.
  • Inheritance Tax – Shares in the Company should qualify for 100% exemption from Inheritance Tax in the event of the death of the shareholder so long as the shares have been held for two years.

Further information: www.hmrc.gov.uk/seedeis/index.htm

Film Tax Relief

UK film production companies are able to take advantage of this unique relief, subject to a number of investment criteria.

For films with a total core expenditure of £20 million or less, the film production company can claim payable cash rebate of up to 25% of UK qualifying film production expenditure.  For films with a core expenditure of more than £20 million, the film production company can claim a payable cash rebate of up to 20% of UK qualifying film production expenditure.

Whilst a UK ‘Cultural Test’ applies to productions, a number of international and bilateral treaties exist in relation to co-productions.

For further information: www.hmrc.gov.uk/films/

For further information on investing in Gizmo Films contact Peter Dunphy p.dunphy@gizmofilms.com

We strongly advise potential  investors to seek individual specialist advice from their tax and financial advisers.