A boost to the UK film industry is edging even closer through the Enterprise Investment Scheme (EIS) but one stumbling block remains.
Some barriers, which threatened to prevent film production from benefiting when the cap on EIS is raised from £2 million to £10 million next year, have been dropped – this is according to draft legislation relating to new EIS rules from 6 April 2012.
However this draft legislation and any changes still need EU State approval. HM Revenue and Customs at this point are refusing to comment on the likeliness of receiving the ‘green light’, as talks are still ongoing.
Industry observers have welcomed the more flexible approach to EIS contained in the draft legislation although several are still calling for greater clarity in how the rules will be applied.
EIS is a government project that’s increasingly being used to finance certain UK films, giving investors a range of tax reliefs.
Even if films don’t make a profit, EIS projects can limit losses through tax relief. If you keep an investment for three years, you can offset 20% of the amount invested against income tax liability in the first year and any profit made is free of capital gains tax (CGT).
If you make a loss, you can offset it against gains you make on other assets or, under certain conditions, against your income tax.