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UK announces changes to film tax relief

Gravity is an example of making use of the UK tax relief for VFXThe UK announced on Thursday (5 December) that it is to make some changes to its tax relief system, making it more attractive for big productions to shoot on British shores.

The changes proposed by the British Government include:

  • The availability of a tax relief at 25% on the first £20m of qualifying production expenditure and 20% thereafter, for small and large budget films. This change will not only make the tax relief system more attractive but also easier to use.
  • Reducing the minimum UK expenditure requirement from 25% to 10%. This will encourage further investment through co-productions with the UK and benefit the visual effects branch specifically as well as the wider industry in general.
  • Modernising the cultural test. The test, set up by the British Film Institute, will now allow for European as well as British culture to be incorporated in the film’s storyline and production. The test will become a 35 point test with a pass mark of 18 and will include an increase in the points available for principal photography/ special effects/ visual effects and the use of English language.
  • An investment of £5m in the UK’s National Film and Television School (NFTS).

In addition the UK’s Chancellor of the Exchequer, George Osborne, has said he will seek state aid clearance to increase the rate of relief to 25% for all qualifying expenditure when re-notifying film tax relief in 2015.

The British Film Commission calls the proposed changes “good news for the British film industry”, especially as they follow the successful launch earlier this year of a tax relief for both high-end television and animation.

Adrian Wootton, chief executive of the British Film Commission said: “The UK is home to world-class filmmaking talent and expertise which help drive the industry forward, as demonstrated recently by the UK-produced and critically-acclaimed film Gravity.

“However, in order to continue to attract business to the UK in a fiercely competitive global marketplace, our industry must be underpinned by effective fiscal incentives. The tax relief was a game changer when introduced in 2007 and today’s announcement ensures we can continue to grow our industry.”

The tax changes announced will be introduced from April 2014, subject to state aid approval.

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