The UK film production industry has welcomed the government's announcement last week of a long-awaited new tax credit system, geared to allow producers to offset certain production costs against tax.
The UK film production industry has welcomed the government's announcement last week of a long-awaited new tax credit system, geared to allow producers to offset certain production costs against tax.

In the government's pre-Budget report, Chancellor Gordon Brown confirmed that the new rate of tax relief for low budget films (up to£20m) will be a net 20%. For big-budget films (£20m and above), the rate will be a net 16%. Both rates apply to the UK spend of a film's budget, capped at 80%.

Existing tax credits - which were 6% to 7% for big-budget films and 14% to 15% for smaller features - have proven a perennial headache for the UK film industry - causing it to lose an estimated£200m in revenue this year alone (Broadcast, 21.9.05).

Film studios have also lost out to locations in eastern Europe and Australia where overseas investors get a much better deal - prompting Pinewood Shepperton and Teddington to enter the crowded TV market.

Pinewood Shepperton chief executive Ivan Dunleavy is positive but tentative about the new measures, which are set to kick in from 1 April next year.

The studios, recently used for hit films Charlie and the Chocolate Factory and Mrs Henderson Presents, had felt the pinch of the reduced investment in UK films with the decision to film the next Bond movie in eastern Europe. The Bond films have been shot at Pinewood since 1962.

"It's very much a work in progress for the government. It's a bit early to be definitive but the headlines are very positive. Everyone's keen to see the details," said Dunleavy.

Post-production facilities specialising in film have also welcomed the tax breaks - with Soho-based film effects facility Cinesite (which worked on the latest Harry Potter) receiving four scripts from US studios since the measures were announced. Cinesite managing director Colin Brown added that the breaks were good news for post houses working in lower resolution (broadcast) work which wanted to cross over into film.

UK Post chair Gaynor Davenport was involved in the government's consultation process on the tax breaks and presented a strong economic argument to support the facilities industry's position. "While facilities do not profit directly from the tax relief it does mean we can continue to develop and grow the sector. It means that facilities have the confidence to continue to invest in the facilities, proprietary software and most importantly their talent," she said.

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