Personal Finance: Magical Movie Tax Break Set to Disappear
The arrival of the second Harry Potter film may be good news for fans of the young wizard, but it also highlights the fact that yet another useful tax shelter is gradually disappearing in a puff of smoke.
The Finance Act 2002 is restricting tax relief on private investment in films, explained Rob Anglin, a financial planning specialist at accountants Grant Thornton in Birmingham.
He said the move was another example of Chancellor Gordon Brown's taxation by stealth and was killing off what was thought of as a good idea.
'Eligible individuals should consider making use of one of the last tax efficient vehicles available before this particular train pulls out of the station for good,' said Mr Anglin.
Investment in British films can qualify for immediate tax relief and is targeted at high net worth individuals with income tax bills of more than pounds 50,000.
This tax break for the film industry was introduced in 1992, extended in 1997 and is available until July 1 2005.
But the Government is constantly imposing stricter conditions on the relief.
The advent of the Finance Act 2002 restricts qualifying investment to a film intended for general release.
Tax relief for British-made TV programmes has been abolished. 'Various packaged partnership schemes are available, with the most popular being the Sale and Leaseback arrangement that provides tax breaks over a 15-year period,' Mr Anglin said.
'Perhaps the most attractive element of this scheme is that the investor is only required to contribute a relatively small percentage (usually around 19 per cent) of the total investment while tax relief at up to 40 per cent is available. …