Magazine article Screen International

How To. Finance a Film Using EIS

Magazine article Screen International

How To. Finance a Film Using EIS

Article excerpt

What is EIS?

The Enterprise Investment Scheme, or EIS, can be great for independent film companies that want to raise finance. Why? Because it is a government-backed tax incentive scheme designed to promote investment in early stage companies and it offers investors potentially fantastic tax reliefs. These tax reliefs act as an incentive to invest and can make fundraising easier and faster than it might be otherwise.

How do I use it?

You need a company. And your company needs to carry on a "qualifying trade". Film development or production will usually be "qualifying trades" which is why EIS is a popular way for independent film production companies to raise finance.

Your company will normally be formed specifically for the film production you are looking to finance. Before fundraising, you will apply to HMRC for "advance assurance" that the company qualifies under the EIS. Assuming that HMRC provides you with the advance assurance, you'll then raise finance by issuing shares in your EIS company to investors.

How do the investors benefit?

Provided that your investors are individual UK taxpayers with income tax bills, they can immediately set-off30% of their investment against those income tax bills.

So, for example, if an investor made a £100,000 investment in your EIS-qualifying company and had a £30,000 income tax bill to pay, he or she would no longer have to pay that income tax bill after having made the investment.

There are other tax reliefs too. An investor doesn't have to pay capital gains tax when he or she sells shares in your EIS-qualifying company. …

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