Tax & your investment

Back a film, keep more of your money

Supporting The Rag can be genuinely tax-efficient. Here's how the reliefs work — with the numbers laid out plainly.

This page is for information only and is not financial advice. Your capital is at risk.

The overall benefit, in one number

Because The Rag can be backed through the Enterprise Investment Scheme (EIS), a large part of what you put in is protected by tax reliefs. On a £10,000 investment, a top-rate taxpayer can claim £3,000 back in income tax relief straight away and, if the film were to fail, loss relief on the rest. Together that shields up to £6,150 of the £10,000 — leaving only £3,850 truly at risk.

Separately, the production itself can reclaim part of its qualifying UK spend through the government's creative-sector relief. That benefits the film's budget rather than your personal tax bill — it is not part of the figures above, but it is one more reason the film stands on solid financial ground.

Four ways to back it — four tax angles

EIS individual investment

For individual UK taxpayers

You subscribe for shares in Firedrake Entertainment, the production company, under the Enterprise Investment Scheme. You can claim 30% income tax relief on what you invest, pay no capital gains tax on any growth if you hold the shares for at least three years, and — if the company fails — offset your loss against your income. You can also defer an existing capital gain by reinvesting it.

Relief is limited to the income tax you actually pay, and the shares must be held for at least three years. Subject to EIS qualification and advance assurance.

Business sponsorship

For companies and brands

A business can sponsor the film — associating its name with the production, on screen or around it — and generally treat the cost as an advertising and marketing expense set against its own profits. This is a commercial arrangement rather than buying shares, so it does not carry EIS relief, but it can still be tax-efficient for the sponsoring business.

Whether a sponsorship cost is deductible depends on it being a genuine business expense — your company's accountant should confirm the treatment.

Direct film investment

For those outside EIS

You can also invest directly into the production for a share of its returns, without the EIS wrapper. This suits backers who don't qualify for EIS or would rather keep things simple. There is no 30% income tax relief this way, and the risk and reward sit differently — you share in the film's success (or otherwise) as a straightforward investment.

Without EIS there is no income tax or loss relief. Returns are not guaranteed and your capital is at risk.

The film's own relief

Context on the production

Independent of any investor, the production can claim the government's creative-sector tax relief (the Audio-Visual Expenditure Credit, successor to Film Tax Relief) on its qualifying UK expenditure. That relief flows into the film's budget, helping every pound reach the screen — a sign of a production built on a sound financial footing.

This benefits the film's finances, not your personal tax position. Eligibility is assessed on the production's qualifying spend.

A worked example: £10,000 from a high earner

Say you earn comfortably over £100,000 a year and invest £10,000 in The Rag through EIS. The first thing that happens is income tax relief: you can take 30% — £3,000 — off your income tax bill for the year. Your £10,000 stake has effectively cost you £7,000.

As a top-rate taxpayer you have plenty of tax to set that relief against, which is exactly why EIS tends to suit higher earners: there is ample income tax for the relief to reduce, and you pay tax at the highest rates that the other reliefs work against.

Now the downside. If the film were never made and the shares became worthless, you could claim loss relief on your £7,000 net cost at your top rate. At 45% that is a further £3,150 back — so the most you could actually lose is £3,850, not the full £10,000.

On the upside, if the film succeeds and your shares grow in value, that growth is free of capital gains tax provided you have held the shares for at least three years. And if you had a capital gain elsewhere, you could defer the tax on it by reinvesting that gain into this EIS investment.

Put together, the reliefs shield up to £6,150 of your £10,000 — while leaving you the full upside of backing a film you believe in.

Try it with your own numbers

All figures are illustrative examples and depend on your own circumstances — please take your own professional advice.

Your top income tax rate
Income tax relief (30%)
+ £3,000
Net cost after relief
£7,000
Loss relief if it fails
+ £3,150
Worst-case real loss
£3,850

Combined tax reliefs

£6,150 (61.5% shielded)

Includes loss relief you'd claim only if the film fails

Only £3,850 of your £10,000 is truly at risk.

All figures are illustrative examples and depend on your own circumstances — please take your own professional advice. EIS reliefs depend on the shares and Firedrake Entertainment meeting the scheme's conditions, and on the investment holding EIS advance assurance. This page is for information only and is not financial advice. Your capital is at risk.

Questions, answered

What is EIS?

The Enterprise Investment Scheme is a government scheme that encourages people to invest in smaller, higher-risk companies by offering generous tax reliefs — including 30% income tax relief on what you invest.

How much income tax relief do I get?

You can claim 30% of the amount you invest as a reduction in your income tax bill, provided you hold the shares for at least three years and have paid enough income tax to cover it.

What happens if the film doesn't get made?

EIS loss relief lets you set your loss (after the initial 30% relief) against your income at your top tax rate. For a top-rate taxpayer that limits the real loss on a £10,000 investment to around £3,850.

Do I pay tax if the film does well?

If you hold your EIS shares for at least three years, any growth in their value is free of capital gains tax.

Who receives my investment?

You subscribe for shares in Firedrake Entertainment, the company producing The Rag. It is that shareholding that carries the EIS reliefs.

Is this financial advice?

No. This page explains how the schemes work in general terms. Your own position depends on your circumstances, so please take advice from a qualified accountant or adviser before investing.

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