UK film financiers have been striking a philosophical note about yesterday's Budget 2008 government announcement that 'sole traders' who spend fewer than 10 hours a week on film-related activities will no longer be able to offset predicted losses on film investment.

Previous UKGovernment clampdowns, whether last year's sudden closure of so-called GAAP-funding schemes or the Inland Revenue's notorious 'Black Tuesday' decision to shut down down production funds in February 2004, blindsided the industry and caused chaos and huge recriminations.

However, yesterday's news appears to have been widely expected.

'The loss of the sole trader schemes has no real effect on our business plan because we are not a sole trader financed fund, although I'm sure it will lead to a slight decline in funding opportunities for Aramid as Aramid looks in many instances to partner with equity partners such as sole traders to finance its films,' said Simon Fawcett, chief-executive of Aramid Capital Partners.

'We always saw it (the 'sole trader' arrangements) as something that would be there for a while but not there for the long term,' said Stephen Margolis, Chief Executive of Future Film. 'Therefore, when we were putting our finance plans for our various films that we are involved in, we did not factor it in as a plank of finance.'

Margolis suggested that the 'sole trader' arrangement was more beneficial for investors than for producers. 'It was quite expensive from a producer's point of view. As far as we were concerned, it was always finance of the last resort was what I call for the independent film sector quite a marginal financing tool. It wasn't a 'must have' in the way that [now defunct] sale and leaseback was a 'must have.''

'I am sure that the combined brains of the financing part of the British film industry will come up with other ideas,' predicted Christopher Figg of venture capital film fund, Limelight VCT plc.

However, Figg suggested that companies like Scion, Future Film and Ingenious, which have specialised in using tax breaks and tax deferral schemes, will now have 'to rewrite their business plans slightly.'

Accountant Harry Hicks of Grant Thornton said it would have been more of a surprise if yesterday's Budget had not addressed the sole trader issue. 'There was no other tax-avoidance route. This was the only game left in town where film was concerned other than obviously the tax credit and EIS.'

Many were noting that EIS schemes were 'very small beer' by comparison with the multi-million dollar schemes from the sale and leaseback era.

Moreover, EIS is unlikely to appeal to investors who are looking for just a tax deal.

Several US films were understood to have accessed 'cheap money' through 'sole trader' arrangements. Some pundits were therefore suggesting that the impact of the budget announcement on the UK independent production would be limited.

'My guess is that happened yesterday will not have a huge impact on the UK independent production industry,' said Hicks.

It is likely that the 'sole trader' route will still be used for lower budget independent UK films. For example, Prescience is understood to be pushing ahead with some 'sole trader' arrangements. Its investors are active in the film business and therefore can pass the 10 hour a week hurdle.

'What we never, never did was put more than one sole trader into a film because we knew that was a partnership, but some of our rivals did...they will not get their relief. It is as simple as that,' said a spokesman from one prominent film financing company.

So, are there any loopholes for film producers and UK financiers left to exploit' 'The industry is filled with very intelligent, highly entrepreneurial people,' said Hicks. 'I would be surprised if there wasn't something...but what that might be, I'm not sure.'

Of course, those not looking for loopholes can rely onthe completely legal new UK tax regime introduced by the government in 2006.