The film industry is glamorous, award-winning and lucrative. Investment opportunities are available for those who want to be a part of the industry; but recent events and press stories of those with negative experiences, or illegal tax avoidance schemes, are overshadowing the huge positives and (perfectly legal) financial gains one can enjoy by investing in the film industry.
In this article we help guide you to spot the good guys from the bad guys and explain how you can get involved in this exciting industry.
What to avoid and look for…
We recommend that you stay away from investing in random film makers on crowd funding websites. Unless you’ve done some serious homework or it’s a well-known director, this is one to avoid.
Most of these ‘crowd funded’ films offer no more than free pens and DVDs rather than valuable shares. Without the proper government backing, you could be stung for your cash.
If you’re investing in a film company…
If you are thinking about investing in a company, make sure you check the company has experience in investment, and been doing it for a considerable amount of time.
They should also have a strong portfolio of films and are able to provide you with a lot of detail on things like scripts, the director and their sales and marketing strategy, so that you are certain that you are not pouring money into a big hole.
Will it make money?
Not every film is going to be the next Pulp Fiction or Good Will Hunting, as much as every director will try to aspire to, but there is some spectacular talent in the UK when it comes to film making.
A film does not need to be a Hollywood blockbuster to make money either. A great return can still be made from films that do not have a cinema release or an a-list actor for instance. Netflix & Amazon prime have completely changed the industry and the young consumer is more likely to tune in at home.
There are occasions, however, where a film may make a loss or break even, but investing properly with the right people will insure that tax benefits and other perks available will minimize any financial loss that may occur.
So what are the real benefits of investing in UK independent film?
Other than obvious financial gain, there are many tax benefits for investing in film.
Be careful, however: only a few companies offer fully legal, well-oiled film investment with tax advantages.
Make sure you’re picking a company that offers EIS, Income Tax & Capital Gains Tax support.
What is EIS?
EIS stands for ‘Enterprise Investment Scheme.’ This is where the government allows advantages for EIS companies that could potentially be a higher risk.
The government allows tax relief of 30% on investors’ income tax on any EIS investment with an additional 28.5% Capital Gains Tax deferral.
A good film investment company will send you an EIS3 tax form which you can submit to an accountant, who would adjust the tax code accordingly after your investment.
There is also something called a SEIS investment with far higher tax breaks, but this means the company is capped at raising £150,000 but offers an income tax relief at 50% and is Capital Gains Tax exempt.
Why invest in the film industry?
The British Film Institute (BFI), recorded that last year there was a massive surge of film production in the UK, with a 35% increase over the previous year.
It’s not only thriving, its booming! The UK box office alone exceeded £1.6 billion!
Not only that, more and more Hollywood studios are using the UK to shoot big-budget films, boosting the UK economy and creating more jobs and services.
You don’t need to invest a fortune!
Nowadays, good investment companies allow you to invest from just £2,000 into a small-budget British film, which within the thriving film world and the right company to direct the returns, could be far greater than any 2-3% increase in the property market.
Yes, the “safe” investment within bricks and mortar would provide security. However, nowadays investors are choosing alternative investment opportunities for the potential to hit ‘the big one!’
How does it compare to other investment opportunities?
Paranormal Activity, for example, cost around £8,000 to make and earned a staggering £100 million for Paramount Pictures. So, it’s not always about the production cost, it just needs to be a good concept!
If a client had invested the baseline investment for Paranormal Activity, not only would he or she have benefited from the tax relief scheme on the “in” but they would have also made a comfortable £49 million profit once split accordingly with the A and B share structure, which would then be divided on a pro rata basis.
I don’t know many houses in the UK that would provide such a high return. Do you?
Yes, it is speculative, but if you pick the right film, even films which haven’t made such a ridiculous amount of profit, you could still show a reasonable return of 8-10 times your money back – but only with the right company and the right distribution!
How much involvement do you have in the film?
A good film investment company, like the ones we approve, don’t just receive a glossy shares certificate they can hang on the fireplace. No, no. They get the opportunity to come on set when it’s being filmed, influence elements of props and the set, meet and greet the actors, and even attend the film’s premiere. They might even walk the red carpet or join the company on corporate events and London screenings!
Some of the bigger or more frequent investors even get to accompany the distribution team to global film festivals such as Cannes, Berlin, Marbella and many more.
After all, the film world is the most glamorous industry in the world, so why not invest in a piece of the action?
How to get involved
If you’re interested in investing in the film industry, or just want to know more, visit our website (www.thatfilmlife.com), drop us an email (email@example.com) or visit us at The Master Investor Show on Saturday, 17 March 2018.
All of the film companies we work with are long standing UK film makers, producers, directors and distributors that are checked and validated by us.