Investing in movies is a risky business.
Or is it?
The UK government has recognised the value of the film industry and created certain tax schemes to encourage film investment. These schemes can substantially de-risk an investment into a UK film, and are especially attractive to investors with lower and more cost effective budgets such as the ones we are focused on.
A Short History of the Enterprise Investment Scheme (EIS)
The Thatcher government launched a version of this scheme in 1977. Basically, British taxpayers were offered an inducement into new small manufacturing companies in the form of a rebate of some of the tax money they had paid, or needed to pay.
Investors were subjected to several rules: – that their investment remain in the company for at least three years, and at no time would they be taxed on the profit. Additionally, should they lose their money, the additional loss could be partially recouped through normal Loss Relief.
Since filmmakers produce product, it is a natural fit for this programme.
This programme still exists under the Enterprise Investment Scheme (EIS for projects with a ceiling of £500.00 and SEED EIS for projects under £150k.
30% for EIS
50% for SEED EIS
It is under the SEED EIS that Raindance Raw Talent Ltd is launching the incubator fund to develop and encourage new and emerging filmmakers by combining our experience and expertise with new talent.
An investor will get 50% of their investment returned by HMRC –
– if an investment is made before April 5 for tax paid 2013/14
– if an investment is made after April 5th for the tax year 2014/15
HMRC rules that the minimum investment is £500.00.
The way Raindance Raw Talent is structured, 1% of the company is valued at £5,000.
Participating is quite simple. Let us know you are interested. We will send you our bank details. Once you have made a deposit, our Financial Controller Philip Gambrill will issue your share certificate and the tax forms follow in due course.
The Enterprise Investment Scheme has 2 Different Budget Levels and Tax Reliefs:
Projects up to £5,000,000 (30% tax rebate)
Projects up to £150,000 (50% tax rebate)
This relief is available to any UK tax payer with these provisos:
– you must invest into a UK qualifying company (as Raindance Raw Talent Ltd is)
– you must leave your investment in the company for three years
– you must have paid the tax, or need to pay the tax in the current year or the next year
In addition if the UK taxpayer is subject to Capital Gains Tax or Inheritance Tax these taxes can also be mitigated or deferred depending on circumstance. Ask your accountant for guidance or look at the HMRC SEIS information here.
Why April 5th is an Important Date
April 5th is the personal tax year end. Under SEIS rules, it is the very last day you can invest into a qualifying business and claim back the tax you paid in the year 2013/14.
For more information and advice, please call us on 0207 930 3412 or email firstname.lastname@example.org
How Raindance Raw Talent Works
By spreading our resources over several projects we aim to spread the risk. This has the added advantage of being able to take risks which if they fail financially, their losses can be offset by gains in other projects.
We have a simple Excel spreadsheet which you can use to calculate how ten projects can work financially with the tax relief (at only 30% EIS) applied.
You can download the EIS Risk Assessor Excel spreadsheet here.