Investors

Investing in Dark Horse Pictures & Lili's Song

Dark Horse Pictures is a British film production company structured to take full advantage of the generous HMRC approved EIS Scheme primarily focused on selecting, developing and producing film projects which offers the potential for substantive tax free returns on investment.
 

We believe that investing in British film offers an exciting tax efficient alternative investment proposition on account of the EIS benefits involved, making it an extremely tax-efficient investment opportunity and one that every prudent investor should consider.

 

As an illustration If net receipts exceed £15M, investors will achieve a 200% return on their investment before tax and 230% return after EIS tax relief.

UK Investor

Dark Horse Pictures are seeking investment from certain selected private individuals for the purpose of financing, producing and exploiting a full length feature film entitled “Lili’s Song”.

 

The company will be aiming to raise a maximum of £1,000,000 in equity for the film through the EIS scheme by issuing up to 1,000,000 B Shares with a minimum application of 5,000 shares per applicant.
 

You will achieve a return in the form of capital growth on your investment rather than through payment of dividends and you need to hold the shares for a minimum of 3 years to obtain the maximum benefit from the EIS tax give away. For this reason you should consider this as a medium term investment opportunity. 

1. Income Tax Relief

Investors may deduct an amount that is equal to tax at 30% on the amount invested from their total liability to income tax up to a maximum investment of £1M per tax year. Spouses are entitled to a maximum of £1M each. You can elect to carry back the income tax relief to the previous tax year and claim a tax refund.

Example

Gross investment in shares

100,000

Less: income tax relief at 30%

30,000

70,000

Net cost of investment

£

2. Capital Gains Tax [CGT] Deferral

CGT deferral enables Investors to defer unlimited capital gains by reinvesting in our company. Provided a capital gain realised (on any asset) is reinvested within 3 years of the disposal giving rise to the gain or not more than 1 year prior to a disposal giving rise to a gain, assessment to tax on the gain arising may be deferred until the qualifying investment is sold. At this point, the deferred gain would come back into charge to tax. 

Example

Gross investment 

500,000

Less: income tax relief at 30%

150,000

Cost of investment

350,000

Capital gains tax liability deferred*

140,000

210,000

Net cost of investment

International Investor

An individual need not be UK resident but the EIS Relief is only available against UK taxable income. So as long as you are paying UK income tax, overseas investors can still take advantage of the generous EIS tax give away.
 

If you do not pay UK income tax it will be difficult to claim EIS BUT, you still have the opportunity to invest in a forward thinking British Film Company that could count towards your investment in UK for immigration purposes.

*Assumed 28% tax payer

3. Capital Gains Tax [CGT] Exemption

If you dispose of shares three or more years after the date of issue, you will be exempt from ALL the CGT on any gain realised. 

Example

Realised value of shares after 3 years

250,000

Less: original gross investment

100,000

150,000

Tax free gain

After two years from the investment date, your investment fall outside the estate for IHT purposes, this allows considerable assets to be preserved 100% intact for future beneficiaries, free from the 40% IHT tax liability. 

4. Inheritance Tax [IHT] Exemption

Example

Initial investment (net of charges)

100,000

EIS relief at 30%

30,000

Capital gains deferral at 28%

28,000

IHT relief at 40%

40,000

2,000

Net cost of investment

Losses can be offset against either income tax or capital gains tax in the current or previous tax year. In the case of a 45% income tax payer a £10,000 investment would have already received £3,000 of income tax relief, leaving £7,000 to be offset against income tax resulting in a maximum exposure of £3,850 i.e. 38.5 pence in the pound. Offsetting against CGT under the same scenario at a rate of 28% liability would provide an exposure of around 50 pence in the pound. 

5. Loss Relief

Example

Realised value of shares

0

Gross investment in shares

100,000

Less: income tax relief at 30%

30,000

Loss before tax relief

70,000

Tax relief at 45%

31,500

38,580

Net loss

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