Film investment with aggressive tax breaks has received a lot of attention lately, mostly to do with individuals looking to abuse a system that was designed for good
If it sounds too good to be true, it probably is.
A more widely accepted way of accessing the potential rewards of investing in film is through the Enterprise Investment Schemes (EIS) and Seed Enterprise investment Schemes (SEIS). These are Government endorsed mechanisms operating within clear boundaries. Providing you stay within the rules, film investment through EIS and SEIS can provide a highly tax efficient source of returns uncorrelated with equity markets.
The UK is a major player in film and the British creative industry continues to go from strength to strength. Between 2014-15, 220 films were made in the UK, thanks to UK film tax relief (which like EIS and SEIS is a Government incentive to encourage economic growth). According to the HM Treasury’s own figures; for every £1 of UK film tax relief granted, a whopping great £12.49 is generated for the UK economy.
This economic activity has a huge benefit not only the film industry itself, but also on associated professions creating employment and helping the wider economy. Little surprise the Government is keen to encourage film investment.
Adrian Wootton, chief executive of the British Film Commission, was recently quoted as saying:
“The UK’s creative sector tax reliefs have been a tremendous success…stimulating growth…across the UK, from London, Bristol and Manchester to Scotland, Wales and Northern Ireland.
The money generated by major inward investment titles helps create further training and business opportunities…maintaining the UK’s status as a cultural powerhouse that is both creative and highly profitable.”
As well as its creative and technology companies, the film industry relies upon a variety of sectors from catering to security, who have also felt the positive effects of the tax relief. BFI figures show that film production supports around 40,000 full-time jobs in the UK, which is a 22% increase from 2009.
Whilst the rules around film investment can sometimes be subjective, their spirit is not. That is why Kin Capital has partnered with one of the UK’s most established media and entertainment advisers; Goldfinch Entertainment, to offer investors the attractive features of film investment, whilst staying within both the letter and spirit of the rules.
Goldfinch is part of leading accountancy group NLP, founded in 1933. NLP enjoys an unrivalled reputation and amongst other well-known media clients, NLP has been the accountant to every Bond movie since Dr No in 1962. Whilst Bond is big, The Bond franchise is not even their biggest client. Over the last two years alone, Goldfinch has advised on nearly 100 separate entertainment sector SEIS and EIS qualifying investments.
The Goldfinch SEIS Fund gives access to Goldfinch’s unrivalled pipeline of new media & entertainment businesses benefiting from government supported schemes. Not only does the fund provide significant tax relief to investors (50% plus other SEIS tax benefits) and capital to businesses that need it most, it also spans far wider across the creative industries than just film with exciting developments in other entertainment sectors.
Technological change, in particular online media streaming services such as Netflix, Blinkbox, LoveFilm etc mean there has been an explosion in demand for new content. It also means that films that otherwise would have struggled to find a buyer, now have access to worldwide distribution they could have only dreamt of just a few years ago.
The Goldfinch SEIS Fund provides an opportunity to invest in the best of British emerging film and entertainment business, in a way that is tax efficient, without being too good to be true. Shares will be allotted throughout the current tax year. It is therefore possible to invest and offset the income tax benefits against the 2014/15 tax year through the use of SEIS ‘carry back’. However, tax relief is subject to personal circumstances and private investors should seek the advice of a suitably qualified and authorised IFA or investment adviser. For further information, please contact one of the Kin Capital team.