There’s no business in show business

New tax reliefs for UK films have replaced the old rules, which were considered by the government to be open to abuse. The new reliefs are now targeted exclusively at film production companies, rather than personal investors and signify an end to film partnership arrangements and sale and leaseback schemes.

Without the old tax breaks, individuals should be more cautious before investing in films. Instead they should consider using alternative tax-efficient investments such as Enterprise Investment Schemes (EISs) and Venture Capital Trusts. For example, EIS investments can:

• Qualify for income tax relief on investments of up to £400,000 (if the shares are held for at least three years)
• Defer capital gains tax (CGT) on other gains that are reinvested in the EIS
• Allow shares to be sold free from CGT

There may be a short window of opportunity for individuals to benefit from the old tax reliefs where films were in principal photography before 1st April 2006. However, most high net worth individuals looking to cut their tax bills will need to consider other options.

If you require any further information, please contact:
Conan Chitham
Tel +44 (0)20 7440 7110
conan.chitham@mishcon.com