Alternative investment options Film
Enterprise investment scheme
The Enterprise Investment Scheme (EIS) is a government project that’s increasingly being used to finance certain UK films, giving investors a range of tax reliefs.
However, the rules are complicated, returns are unpredictable and the market is risky, so it’s essential to obtain independent, expert financial advice.
Under an EIS project, investors can invest up to £400,000 a year but the minimum is usually lower. For example, with the film Clubbed, made by Formosa Films and set in the 1980s’ club scene, the minimum investment was £5,000 for each person.
Even if films don’t make a profit, EIS projects can limit losses through tax relief. If you keep an investment for three years, you can offset 20% of the amount invested against income tax liability in the first year and any profit made is free of capital gains tax (CGT).
If you make a loss, you can offset it against gains you make on other assets or, under certain conditions, against your income tax.
It’s not just box office sales that investors hope for. Formosa Films’ Neil Thompson says: ‘Many people are attracted by the glamour and excitement. Our investors have had evenings at Bafta with the cast, for example.’
He adds: ‘There are potentially huge returns to be made. For instance, with Clubbed, the company is owned by the investors who control the rights to the film, as well as other outputs such as TV, DVD and the soundtrack.’
For film fans looking for smaller investments, film memorabilia can suit every pocket. As with other types of investment, Katherine Williams of Christie’s Popular Entertainment Department recommends buying an item you like rather than targeting capital gains.
It’s difficult to predict items that will become valuable, but those from iconic stars such as Marilyn Monroe and films such as Star Wars, perform consistently well. In 2006, the Givenchy gown worn by Audrey Hepburn in Breakfast at Tiffany’s sold for £467,200.
For smaller budgets
For the more modest budget, items are available from £400 upwards. For example, you could buy an original 1937 vintage celluloid from Snow White from around £2,000.
Autographs and posters
Original posters are also an affordable way of investing. Steve Kennedy turned his hobby into a business, now running Original Poster, a website devoted to classic film memorabilia. He has even hired out posters from production companies to create authentic atmospheres on screen.