British Film Investors Profit From 100 Per Cent Tax Write-Off

by Amanda Banks, Tax-News.com, London

26 September 2001

The latest blockbuster movie to premiere in the UK earlier this week, Enigma, was one the most recent of many British films whose investors have profited from 100 per cent tax write-offs of sale and leaseback partnership arrangements. Under such partnerships the master negative of a British film is purchased and leased to the producer for fifteen years during which time the film will be distributed worldwide and sold to international television networks.

According to details from Accountancy Age, the 100 per cent tax relief applies to British films that cost at least £15 million to make and those wishing to invest in the partnership arrangement must sink at least £100,000. The Inland Revenue then provides the investor with a full rebate. Of the £100,000, £17,000 must be the investor's own money; the remainder can be sourced through a bank loan. This would see the Inland Revenue repay the investor with £38,000, giving a cash flow profit of £21,000. Investors can take advantage of the full write-off until at least July 2005 when the Treasury will review the relief.

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