Angel investors’ tax relief for EIS and SEIS investments

Angel investors’ tax relief for EIS and SEIS investments

Angel investors tax relief for EIS and SEIS

Gitz, glam and high-risk, high-reward strategies; the high octane world of film investment has it all. If you’re considering bringing your investment savvy into the creative industries and you want to be in at the ground floor on the next blockbuster, becoming a film investor could be a smart move.

Invest through a specialised film funding, production and distribution company like Films4U and you’ll benefit from the generous tax breaks available through EIS and SEIS.

What is an Angel investor

If you’re a high net worth individual who’s not afraid of risk-taking and you prefer to invest in the early stages of a project that offers the potential for high rewards, then you have all the attributes of an Angel investor.

Angels aren’t afraid to tread where other investors might be more cautious. They’ll consider a movie investment that offers ownership equity rather than looking to make a quick return. Often a film finance opportunity will let them bring their own knowledge and experience of the sector to the table.

And UK movie investor Angels have plenty of money-making opportunities.  The UK film business is worth over £14.8bn annually to the UK economy and enjoys a 24.6% share of the global market. Invest internationally and you’re tapping into a global market worth £42bn.

Potential film financiers who may lack industry knowledge can maximise investment opportunities by investing through Films4U – our list of successful projects speak for themselves!

Why do Angel investors get more tax reliefs?

Because Angel investors are willing to make risky early intervention investments, they’re offered greater incentives. In fact, generous government tax relief schemes are one of the major drivers behind movie investment in the UK. Angel investors who pay UK tax can access several schemes that recognise the risk levels of their investments in the film industry and reduces them dramatically.

SEIS (the Seed Enterprise Investment Scheme) & EIS (the Enterprise Investment Scheme) both offer some great incentives for Angels prepared to invest in the creative industries.

If you’re considering investment in film the rewards can be highly lucrative. The government provides incentives to invest in independent film companies and high-risk projects by mitigating sophisticated investments in this potentially risky business. In return, Angel investors can reap some incredibly generous benefits in terms of tax relief.

Tax relief for EIS

What is EIS?

EIS is the parent scheme of SEIS and was introduced in 1994. This early stage investment scheme offers investors a 30% tax break against the amount invested and has raised over £20bn for the UK film industry.

Changes in 2018 introduced a new ‘risk to capital rule’ but we’ll help you to make your investments in projects that offer long term growth in alignment with the rule change. In fact, changes to EIS are allowing companies to scale up and offer even better opportunities for investors.

EIS benefits Angels by delivering income tax and capital gains tax relief that make investments in high risk industries like film much more attractive.

What are the benefits for Angel investors?

  • 30% Income Tax relief up to £1m
  • 100% Capital Gains Tax exemption
  • Loss relief at the highest rate of tax if an investment proves unsuccessful
  • 100% Inheritance Tax relief
  • Carry-back facility

What are the tax relief rules for investors?

Angel investors need to abide by the following rules to maximise the tax benefits from EIS:

  • You must be a UK taxpayer
  • You can only invest up to £1m in qualifying companies in any tax year
  • You need to invest for a minimum of three years
  • EIS tax relief can’t be carried forward
  • You can’t have any connection to the company as a paid director, partner or employee

How it works

When it comes to investing in an EIS eligible company, you’ll benefit from a 30% tax break however the company performs. Invest £60,000 and you’ll receive £20,000 in tax relief. Plus if the investment fails only £40,000 will be at risk on which you’ll receive a tax relief of 45%.

Claiming your EIS tax relief”>guide to claiming your tax relief

Tax relief for SEIS

What is SEIS

SEIS tax relief was introduced by George Osborne back in 2012 to incentivise seed and very early-stage investments. It’s a highly attractive scheme for film financiers who can claim 50% income tax relief on investments up to £10,000 in any tax year. SEIS builds on EIS rather than replacing it completely.

Conceived by the government as a way to help small, early-stage companies raise equity finance by offering tax reliefs to individual investors, SEIS is one of the world’s most generous tax relief schemes with significant reductions in Capital Gains and Income Tax.

What’s the difference between EIS and SEIS?

EIS is targeted at early-stage projects with a demonstrable capacity for growth. SEIS is focused on very early stage/seed investments and offers a higher Income Tax relief of 50% as opposed to 30% for EIS.

What are the benefits for Angel investors?

  • 50% Income Tax relief on investments up to £100,000
  • 0% Capital Gains Tax when you dispose of your investment after 3 years
  • 50% Capital Gains Tax exemption on profits invested from non-SEIS companies in SEIS eligible investments
  • 100% Inheritance Tax relief
  • Loss relief at the highest tax rate on unsuccessful investments
  • Carry-back facility

What are the tax relief rules for investors?

Like an EIS investment, investors need to follow the eligibility rules to take advantage of the tax relief offered by SEIS:

  • You must be a UK taxpayer
  • You can only invest up to £100,000 in any tax year
  • The investment must last for a minimum of three years
  • You can’t carry forward SEIS tax relief

How it works

SEIS works in an identical fashion to EIS. So if you invest the full £100,000 you’ll receive tax relief of £50,000 however the investment performs. If the company fails, you’ll receive loss relief at 45% meaning your total loss will be £38,500.

Films 4U

Whether you’re an experienced Angel or a first-time film investor we specialise in film investments with guaranteed distribution. Our team has over 100 years of combined experience making movie investments that are exciting and profitable. Invest with us and you’ll benefit from EIS and SEIS tax relief while supporting small film companies to create the classics of tomorrow. Ready to find out more? Contact us for more details.

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