UK Investment Opportunities for Movies & Entertainment

SPHINX

LOSS RELIEF (in detail)

If any investment in an EIS Company realises capital losses, then loss relief is available (net of initial income tax relief). This loss can be offset against income tax of the same year or the preceding one, or against capital gains of the same year or carried forward. Loss relief can reduce the investor's exposure to 48% of the original investment, (assuming a higher rate tax payer) if the loss is offset against income tax

Example - Loss Relief Against Income Tax

Initial Investment	£50,000
Less income tax relief at 20%	(10,000)
Net cost of Investment	£40,000
If Investment fell to £0, Net loss	£(40,000)
Loss relief at 40%	16,000
Net loss	£(24,000)
Percentage of Original Outlay	48%

If the loss is offset against capital gains tax, this can be done against the same year or carried forward, at the prevailing rate, being 18% from 2008/09.

Example - Loss Relief Against Capital Gains Tax

Initial Investment	£50,000
Less income tax relief at 20%	(10,000)
Net cost of Investment	40,000
If Investment fell to £0, Net loss relief at 18%	(7,200)
Net Loss	£(32,800)
Percentage of Original Outlay	65.6%

Image from "Black Hawk Down"