Money

BFI sets up tax-break fund to attract film investment


The British Film Institute has set up an independent commercial fund that will offer tax breaks for investments in screen content in a bid to attract new money to UK creative industries.

It is the first time that the BFI, the government-funded charity that promotes UK film-making and distribution, has collaborated with the private sector to stimulate funding for the roughly 300 independent film and television production companies it estimates are in the UK.

The launch of the fund comes a few months after the BFI warned that the UK’s creative industries risked missing out on shopping sprees by Netflix, Amazon and other big streaming players, which have snapped up UK television series for their digital platforms. 

“The demand for screen content is booming, driven largely by the proliferation of streaming platforms,” said Amanda Nevill, BFI chief executive. But she warned that many producers lacked the funding to develop enough premium content to take advantage of the streaming boom. 

The new fund will raise £20m in its first year from a range of UK investors. It will be independently run by BFI-appointed fund manager Calculus Capital and Stargrove Pictures, a screen finance company, and will take advantage of the UK government’s Enterprise Investment Scheme (EIS) which offers tax breaks of up to 30 per cent to encourage investments in high-risk companies. 

Ms Nevill said the intention was to give production companies the budget to work on developing two or three films at a time rather than focus on just one project, which she said had long been a “structural challenge” in the entertainment industry.

The fund will invest in six to 10 companies that are less than seven years old, said Stephen Fuss, chief executive of Stargrove. “We want to help creative content companies with resources to acquire and develop intellectual property, package with cast and directors, and then sell to streaming services as well as traditional studios and broadcasters.”

UK spending on the acquisition of film rights and content production in 2018 was roughly £8.5bn, according to Richard Broughton from Ampere Analysis. “[£20m] is not a large amount, but it is good that funding is being made available for production — every little helps,” he said.

Ms Nevillsaid that the fund could provide between £1m and £3m to some independent producers which could be “game-changing and make them more attractive to other investors”. 

“[The BFI] develops roughly 100 projects that produce roughly 20 films a year — we completely understand how valuable that money is,” she added.

EIS funding has been used in the production of several hit movies and television productions. The founders of Stargrove have used EIS funding in films such as The Suffragette, starring Carey Mulligan, Selma, starring David Oyelowo, and Carol, starring Cate Blanchette.

Philip Hammond, the UK chancellor, introduced more stringent requirements for EIS funding nearly two years ago, citing concerns that the schemes had been misused as “capital preservation” vehicles rather than routes to fund high-growth, high-risk companies. 

John Glencross, chief executive of Calculus, said the new stringent tax-exemption requirements would not affect the BFI-backed fund because it sought to help companies develop intellectual property rather than support the production costs of films.

A spokesperson for HM Revenue & Customs said: “We are glad to be seeing a positive change in how film companies seek and use the investment.”

The launch of the BFI fund follows several years of consolidation among independent production groups, which have been snapped up by Hollywood studios and media conglomerates. Neal Street Productions, which was started by the director Sam Mendes — and which created series such as Call the Midwife — was acquired by All3Media while Left Bank Pictures, the creator of The Crown, was bought by Sony Pictures Entertainment. 



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