Originally posted by VectraMan
The Film one is pretty much gone now. In that you borrowed money to fund a new film project and became a partner in the production business. The costs usually generate losses prior to the film being released and you can use them against your other income. The loan was usually insured so that it was repaid.
Capital allowances one - 100% capital allowances - pretty much the same as is the R&D scheme - £1.50 relief for every pound spent times 40% higher rate tax.
Example - Invest £100k Funded by Borrowing £400k Tax Losses - 100% Capital allowances = £500k worth at 40% £200k. Immediate Net Gain £100k (£100k invested less £200k tax relief). Interest on the loan payable out of immediate £100k gain but would be minimal. Rental income from assets acquired for £500k would cover repayment of loan and bank charges leading to no taxable profit in investment vehicle. £400k loan guaranteed by bank so that they'll never come chasing you for it and loan eventually repaid after say 10 years.
In other words you invest £100k and get £200k back and that's it.
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