British film-makers are unable to decide whether to raise a toast to Gordon Brown or bay for his blood.

The Chancellor has closed a tax loophole, potentially costing the industry millions of pounds, while introducing a new tax credit which will give an as yet unknown amount back to film-makers.

Producers, investors and accountants have been hit by a spate of changes to the tax system, the most jarring of which was the abolition last month of “sideways loss relief” — a tax allowance that had formed the backbone of a recent boom in British film.

The question at the heart of the debate is whether the new, as yet untested tax credit will compensate for the loss of the allowance.

Without the relief, producers fear a mass exodus of investors such as Future Films, Ingenious Media and Scion, which have been ploughing millions into British film. Ingenious is already thought to be considering a complete pull-out, having been criticised for abruptly withdrawing more than £1 million from the new St Trinian’s film two weeks before the start of shooting.

The upheaval comes at a time when British film-makers are daring to believe that they are on the cusp of a golden age. Over recent months the success of exports such as The Last King of Scotland, together with international plaudits for British acting talent, has created a swell of optimism. Hype around soon-to-be-re-leased films such as Brick Lane has added to the buzz.

However impressive the British talent, though, the industry admits that the tide of good fortune has been in no small measure down to wealthy investors.

The tax credit is likely to continue to attract US investment to big UK studios. However, independent producers, who are less likely to get money from abroad, fear that it will not provide as much cash as they have grown used to receiving.

So the feeling in the industry is that the Chancellor’s move will have a contradictory effect — potentially boosting the UK’s international film presence but damaging grass roots creativity.

Producers are also confused by how the credit — which gives back 16 per cent of costs on films worth more than £20 million and 20 per cent on those costing less — will work.

Tim Willis of PACT, the trade association for independent film, says: “There has been a whole series of blows over the years that have made it tough to piece together financing. The industry will adjust to this one, but it’s hand-to-mouth and some may not survive.”

While there is tentative hope that the credit will create certainty, there is anxiety that it may fail in practice. Producers are worried, for instance, that banks, wary of risk, may not be willing to provide up-front cash.

Peter Watson, chief executive of the Recorded Picture Company, said: “We do not yet know the modus operandi. It could all be a dream. Will this time be different? Will banks provide cashflow? How long will the credit take to process? We do not know” Uncertainty has also left investors wary. But film can still be profitable, according to accountants. “Film has always been a bit of a black box,” says Martin Churchill, of the Tax Efficient Review, “but it can make money. You just have to be early enough in the queue.” If small producers are feeling a little jaded, the cavalry could be on its way. Investors such as Future Films, the group behind Bend it Like Beckham, are keen to keep a hand in financing by providing cashflow to those struggling to obtain bank loans, in return for an agreed percentage of the tax credit.

The Enterprise Investment Scheme (EIS) is also being used for funding. There are seven film funds already in operation. However, restrictions on EISs prevent large chunks of cash going in.

Mr Churchill said: “There will continue to be difficulties, but the industry has proven to be resilient. Once producers and investors get to grips with the new system, problems will quickly be ironed out.”

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