Film investment badly needs an image overhaul – and not just so that the UK’s vibrant film industry can continue to thrive. Most clients and advisors will know that film investment is strongly supported by government tax incentives. What they may not know is how far filmmakers are rolling out the red carpet to attract investors. Innovative finance structures are turning the old ways on their head, meaning that clients can invest in film with more confidence than ever before.

As someone who is passionate about UK film as well as being a tax specialist, it pains me to see how misunderstood film investment is. Some associate it with tax evasion while others see film projects as mere vanity investments akin to black holes swallowing up endless capital with precious little hope of returns.

There’s no denying that film investment has had some pretty poor press over the years. Tax breaks rolled out in the 1990s were abused by some parties and just last year certain celebrities hit the headlines over dubious film investment schemes. But while tax planning and film investment continue to be mentioned in the same breath, today it is for all the right reasons. To put it bluntly, pre-2007 some film finance schemes were about “playing the rules” on tax. In contrast, the EIS, Seed EIS and tax credit incentives taken advantage of today are entirely legitimate. In fact, HMRC smiles on tax-incentivised film investment to such an extent it is probably the most supported industry in the UK today.

The tax incentives prompting high net worth investors to invest in EIS vehicles are certainly very generous. They also go a long way towards mitigating investors’ fears of losing money. The income tax relief for EISs has been raised from 20 per cent to 30 per cent, meaning that the government is essentially funding almost a third of any EIS investment. Furthermore, higher-rate taxpayers can obtain loss relief of up to 65 pence in the pound, which effectively gives them a government-backed safety net should investments not succeed.

These tax breaks offer a good deal of reassurance, but savvy EIS firms (and film production companies) are going much further to allay investors’ concerns. They are building investor protection into the finance structure from the off and making sure that equity investors are first in line to get paid – not, as has often been the case, at the bottom of the pile.

Equity investors often step in towards the end of a project to save the day, providing the capital to ensure a film in post-production has a score or creating a distribution budget which will ensure a finished film is actually seen by audiences. It is therefore pretty ironic just how poorly investors are sometimes treated in return – even in the case of angel investors who fund a big chunk of a project. Their money is swallowed up and they have little notion of when, or even if, they will see a return. A project may be wildly successful and yet investors may not see any upside for a long time. This is the antithesis of our approach, and of the production companies we work with.