06/12/2013 - Tax relief to be available at 25% on the first £20 million of qualifying production

The UK government has announced enhanced tax relief measures for films. From April 2014, tax relief will be available at 25% on the first £20 million of qualifying production expenditure and 20% thereafter, subject to state aid clearance. The minimum UK expenditure requirement is being reduced from 25% to 10%. The cultural test is being modernised and expanded to allow for European as well as British culture. 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 English language.

The government will also invest £5 million in the National Film and Television School’s Digital Village, to expand and upgrade its existing facility.

John Graydon, Partner in the UK accountancy firm Saffery Champness, specialists in tax incentives, said, “The changes means that large-budget films will receive more tax relief and find it easier to qualify.  In addition, lowering the minimum UK spend requirement to 10% and adjusting the cultural test will allow more productions to come to the UK, and will also help UK independent production companies develop coproduction partnerships, and in turn open up creative and commercial opportunities for UK companies, cast and crew.”

Alex Hope, Managing Director of VFX company Double Negative said, “Adjusting the film tax relief so that it reflects changes in the production process will enable the UK industry to capitalise on its strengths in VFX and cutting-edge production technologies.  This makes financial and creative sense.”