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VCTs offer new hope for films

The development of venture capital trusts investing exclusively in films could go some way to filling the hole left by the Inland Revenue&#39s closure of film finance tax perks, says Allen- bridge Group.

Allenbridge Group director of tax shelter res-earch David Knight bel- ieves that comments from Chancellor Gordon Brown that he does not want to hinder venture capital investment in the film industry will prompt product providers to look at the development of film VCTs.

A new tax scheme unveiled last week means that expenditure on the production or acquisition of the master version of a film can no longer be written off for tax purposes but, because of the time period over which films are made, they would be suitable to be financed through VCT start-up companies, says Knight.

A film VCT would be subject to the same capital gains tax break of 40 per cent of up to £200,000 for two years as any other VCT. Such a product could provide a boost to the VCT sector which has slipped back considerably from its peak in 2000/01 when £450m was invested.

However, he does not expect film investment will be anywhere near as high as before the Chancellor&#39s crackdown on tax avoidance began.

Knight says: “This is a real glimmer of hope but it will not bring anywhere near the kind of benefits that we have seen before.”

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