By Samantha Washington
Producer, Alvin Hall's World of Money
Do the tax breaks available to the investor make film a good investment?
Global box office takings in 2007 reached a record high of more than £13bn, according to the Motion Picture Association of America.
This summer, despite the economic downturn, audience figures have remained high for blockbusters such as the new Batman film, The Dark Knight.
And films are not just about audiences - with a variety of investment tax breaks on offer, the silver screen can seem alluring to those hoping to make profits.
But the movie industry is notoriously risky and some experts say the incentives do not make up for the chance that you could lose all your money.
Unlike the big studios, independent film companies rely on private investment.
Plum Pictures is based in one of the "indie" capitals of the world - Soho in New York.
The company makes four films a year and these are all financed with money from individuals.
One of the founders, Celine Rattray, says those who have put cash into her movies have made good returns.
"On average our films have made 30% return on investment.
Plum Pictures try to make money by combining big stars with a low-budget
"Our films have never, to date, lost money."
Crucially not all of their films have been box office successes, but sales of distribution rights around the world make up the bulk of the revenues.
But potential backers of Plum Pictures should take note that participating does not come cheaply.
Co-founder Daniela Taplin Lundberg says those interested will need to part with a six figure sum.
"We try to have each investor put in no less than $250,000 (£125,000).
"Otherwise it becomes a very cumbersome budget.
"It takes so much time for us to talk to each investor once every couple of weeks."
And while Plum Pictures can boast some impressive returns, the movie business is notoriously risky.
Hal Vogel, author of Entertainment Industry Economics, says you could stand to lose your money.
"There are huge returns that are generated out of the blue.
"There are some films that cost very little that had enormous returns, like The Blair Witch project.
"You can point to 15 or 20 over a 10 year period.
"But there are thousands of films released, and the odds are that you're not going to do all that well."
Because the chances of runaway success are small, Hal Vogel warns that you should not put all your eggs in one basket if you decide to invest.
"You want at least six to 10 films in your portfolio because you cannot predict what is going to be a hit."
In recognition of the risks involved, some independent films made in America can get a financial boost from the state in which they are made.
New York has a tax credit programme for qualifying independent productions which boosts the budget by 35%.
This credit goes to the film-makers, but investors benefit indirectly because a more expensive movie can be made without requiring more money from them.
London is the other big capital for independent film and it also has various tax incentive programmes.
Importantly, these give not just to the film-maker, but directly to private individuals who put money into a movie too.
These sweeteners are available to those who invest in a film which has qualified for Enterprise Investment Scheme (EIS) tax relief.
Leisure spend tends to remain constant through credit crises
This government backed programme was created to encourage investment in new, high-risk companies looking to raise finance, and film is one of the industries that qualifies under the scheme.
People who put money into a film which is made under the EIS get a variety of tax breaks.
The first is income tax relief - for every £1 put into a qualifying film, investors will receive 20p off their income tax bill at the end of the fiscal year.
As long as you hold the investment for three years, this will never be taken away.
There are also some attractive capital gains tax (CGT) breaks.
Firstly, any profits made within an EIS investment will not land you with a CGT bill.
Secondly, you can invest any capital gains you have made in the last three years into an EIS and not pay the tax you owe until you take your money out.
Because the rate of CGT been lowered from 40% to 18%, this can save those with large capital gains a lot of money.
On top of these, if the holder of the investment dies, any money held in the Enterprise Investment Scheme would be free of inheritance tax.
Is it worth it?
But do the tax breaks make film a good investment?
Martin Churchill, editor of Tax Efficient Review, says the incentives help, but they only make movies an attractive prospect for those with money to lose.
"The EIS offers the widest set of tax breaks in the UK at the moment.
"But these are not products for the man in the street.
"This is at the top end - where people should be putting £5,000 of their £1m portfolio"
These film EIS products are available through specialised media financial advisers and can be accessed in theory for as little as £500.
But there is little information on the past performance of each of these schemes, and potential investors will need to do their own research into the track records of the producers behind the films.
BBC Radio 4's Alvin Hall's World of Money was broadcast on Saturday, 9 August 2008 at 1204 BST, and was repeated in a longer version on Monday, 11 August 2008 at 1504.