UK Film Tax Incentives

The UK’s film and high-end television tax reliefs are widely recognised as the most transparent, inclusive and reliable production incentives in the world.

UK PRODUCTION FILM TAX RELIEF

For all British qualifying film and TV productions of any budget level, the production company can claim a payable cash rebate of up to 25% on UK qualifying expenditure. This has the effect of subsidising productions and so improving the chances of profitability of TV and film projects.

THE ENTERPRISE INVESMENT SCHEME (EIS) AND THE SEED ENTERPRISE INVESTMENT SCHEME (SEIS)

Entrepreneurial businesses in the UK are supported by a range of tax incentives and reliefs. This support provides a range of ways to manage the risk and enhance the potential profits.

ENTERPRISE INVESTMENT SCHEME

First introduced in 1994, the Enterprise Investment Scheme, or EIS, was designed by the UK Government to encourage equity investment in unlisted (private) companies and to stimulate entrepreneurial activity. An EIS encourages investors to invest in qualifying companies through a series of very generous tax reliefs. Over £18 billion has been invested through the Enterprise Investment Schemes. Depending on your income bracket, up to 70% of an EIS investment can be protected.

SEED ENTERPRISE INVESTMENT SCHEME

In 2012, the UK Government introduced the seed enterprise investment scheme, or SEIS. It offers an advantageous 50% tax relief (instead of 30% with EIS) with a total equity investment limited to £150,000 over two years. Shadowlie Media has secured 'Advance Assurance' to issue £150,000 of shares which will qualify for SEIS benefits.

QUALIFYING PERIOD

To receive the full benefits of SEIS or EIS, your investment must be held within the qualifying company for a minimum three-year period. Shadowline Media works with highly experienced accountants to ensure you gain the maximum benefit from these schemes.

TAX RELIEFS IN DETAIL

INCOME TAX RELIEF

An investor who subscribes in cash for ordinary shares in an SEIS/EIS qualifying company can obtain income tax relief of up to 50% (SEIS) and 30% (EIS) on investments of up to £1,000,000 each year. This relief can be claimed either in the tax year the investment is made, or carried back to the previous tax year thus providing a reduction or rebate on a pending or recently paid tax bill.

INHERITANCE TAX EXEMPTION

Provided a shareholder has owned shares in a qualifying unquoted trading company for at least two years and certain conditions are met at the time of transfer, inheritance tax business property relief of 100% is available, which reduces the inheritance tax liability on the transfer to nil.

There is no limit on the amount you can invest in SEIS/EIS companies for inheritance tax relief purposes.

CGT DEFERRAL RELIEF

Investors with qualifying capital gains made up to three years before or one year after an SEIS/EIS investment is made can claim ‘deferral relief’ against those gains.

Deferred gains do become taxable again on certain events, such as a sale of the SEIS/EIS shares.

The £1,000,000 annual limit does not apply for CGT deferral relief purposes - any amount can be deferred.

EXEMPTION FROM CAPITAL GAINS TAX

If an investor holds SEIS or EIS shares for at least three years, any capital gain realised on the disposal of the shares will be both income tax and capital gains tax free, provided income tax relief has been given and has not been withdrawn.

LOSS RELIEF

If a loss is made on the disposal of SEIS or EIS shares at any time, the loss may be claimed against either current year or future capital gains, or, by election, against income of the current or previous tax year. The effect of this, for a 45% taxpayer, is to reduce the loss by a further 22.5% of an SEIS investment bringing total reliefs to 72.5% and 31.5% for an EIS investor bringing total reliefs to 61.5%.

Before investing in a company offering SEIS/EIS reliefs, investors should consult their tax and financial advisers.