Film Industry: Loophole 'worth £1bn' closed for producers

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The Independent Culture

A tax loophole that some experts believe was worth up to £1bn to the global film industry has been closed.

The measures are designed to stop sole traders hiding income by using sideways loss relief (SLR), which allows investors to offset predicted losses. Under the new rules, eligibility will rely on the individual working at least 10 hours per week on the project.

But SLR is widely used to help fund films. "It will now no longer be possible for individuals to offset losses against their other income, unless they play an active part in the management of the film business," said Lucy Elwes, a senior tax manager at KPMG's UK media practice.

Michael Gubbins, editor of Screen International, said: "There is a shift from funding through tax relief, to a specific credit for producers. While there are losers, it is now widely understood the stability and transparency of tax credits for producers will count for more than a tax avoidance scheme in ensuring a sustainable industry."