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Invest in Bing? How EIS investors can score a 30% tax break


A preschool bunny in dungarees is an unlikely investment prospect for most, and yet hundreds of everyday investors have piled money into a cartoon character which is now on its way to global stardom.

Since appearing on CBeebies in 2014, Bing has become the most requested preschool show on iPlayer and, along with its related merchandise, has become licensed in 130 countries.

Acamar Films, the UK indie behind the series, has scored particular success in Italy, where it is launching a Bing theme park – much like Peppa Pig World in Hampshire – as well as in Poland and Benelux.

Cartoon bunny Bing has received £17m of investment from private investors via EIS

Cartoon bunny Bing has received £17m of investment from private investors via EIS 

This is largely down to an army of private investors. Of the £60million raised by producer Mikael Shields, £17million has been via the Enterprise Investment Scheme, a tax-efficient government-endorsed vehicle that aims to help new businesses.

A total of 456 investors have participated in funding Bing through EIS specialist broker The Wealth Club.

Now Shields is looking to raise further funds for Bing in the hope the character will, like Peppa Pig and Peter Rabbit, become a global icon.

From today, investors will have their last chance to invest in Bing via Acamar Films through EIS.

Bing clings on to IP rights

Bing recently penned a deal with Warner Media in the US but its origins are far more humble. 

Acamar acquired the rights to Ted Dewan’s Bing Bunny books in 2012 and started to develop the series in a small production studio in Camden, London.

In 2020 it became iPlayer’s third most downloaded show across all genres, only beaten by cult favourites Killing Eve and Normal People.

Popular cartoon characters at this level tend to be snapped up by media and entertainment giants but Acamar has been able to keep the full rights to Bing. And that is largely down to EIS.

 We retain full control of our intellectual property rights and entitlements to 98% of revenues making our enterprise significantly more valuable.

 Mikael Shields – Bing producer

‘It is unusual for a company like ours to be embarked upon global expansion, and yet still be privately owned. 

‘By this stage of development, many companies would have been acquired by a larger, possibly overseas, partner. EIS qualifying investment has allowed us to stay private for far longer,’ says Shields.

‘What this really means is that we have been able to retain creative control of our project, and to develop our organisation with more patience and attention to detail than might otherwise have been the case.

‘It also means that we retain full control of our intellectual property rights and entitlements to 98 per cent of revenues making our enterprise significantly more valuable.’

This will no doubt be welcomed by existing and prospective investors particularly as Bing, and Acamar, look to break the US.

Other EIS success stories include Gousto, which has become the leading meal kit subscription service in the UK. It has now outgrown the scheme and has moved into more structured fundraising rounds with investors like MMC Ventures but it does highlight the path to success. 

Alex Davies' Wealth Club offers investors the opportunity to invest in Bing

Alex Davies’ Wealth Club offers investors the opportunity to invest in Bing 

Why invest via EIS?

Like venture capital trusts (VCTs), EIS offers generous tax breaks for private investors to encourage investment into small companies with high growth potential.

The scheme, which started in 1994, offers up to 30 per cent income tax relief on up to £1million each year, and up to £2million when investing in ‘knowledge intensive’ companies, such as those in the life sciences sector.

There is no capital gains tax payable but unlike with VCTs, dividend income will be taxed. After two years the investment can be passed on free of inheritance tax.

Wealth Club’s Alex Davies says: ‘EIS is a wonderful thing for investors. It allows them to get into businesses from a very early stage and go on the journey from being a minnow to potentially one of tomorrow’s winners.

‘This is very much the case with Acamar whose show Bing only launched in 2014 but is now a massive success in the UK, Poland and Italy and is looking likely to replicate that success around the world. 

‘Of course investing in early stage companies is risky, however that is where EIS comes into its own.

‘If things go wrong, then all the tax relief provides a valuable cushion. Conversely when things go right and you get a positive return, that’s tax free too.’

The minimum holding period for EIS tax relief is three years although experts suggest investors should hold for considerably longer.

The EIS round for Bing via Acamar will launch today via the Wealth Club.  

SHOULD YOU INVEST THROUGH EIS OR VCTs?  

EIS has generally been grouped with VCTs because of the associated tax reliefs. 

VCTs are investment companies listed on the London Stock Exchange which raise money from investors to invest in young, usually privately-owned companies that are not listed on the stock market, or those listed on the junior market Aim.

As an investment trust, when someone invests in a VCT they become a shareholder of the trust itself.

It means investors can get exposure to any investments the VCT makes after the investment as well as the existing portfolio.

Recent high profile successes for venture capital include online used car seller Cazoo, fashion marketplace Depop and recipe box seller Gousto.

Like EIS investors, VCT investors can claim up to 30 per cent income tax relief on the amount they have invested in a VCT, provided they hold the investment for at least five years.

The amount of income tax investors claim cannot exceed the amount of income tax due.

Additionally, VCTs offer tax-free capital gains and tax-free dividends, if the VCT pays out dividends, but EIS investors will have to pay tax on dividends. 

VCT investors can put in up to £200,000 but this figure increases to £2million through EIS. 

 

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