07/12/2005

"After consultation with British filmmakers, I can announce a new film tax credit to support British films, increasing support directly for producers so we can guarantee credit worth 16% for larger budget films, and at least 20% for small budget films". When hearing the UK Chancellor of the Exchequer Gordon Brown making this major announcement as part of his pre-budget statement to the House of Commons last Monday, the whole UK film industry must have heaved a heavy sigh of relief. The UK government not only reiterated its full support to the local film industry which forms "an important part of the UK cultural heritage". It also proved more generous than had been feared initially.

To make it simple, the new tax relief will mean the following:
-on low budget films with production budgets up to £20m (€ 29.5m) such as Mrs Henderson Presents or Vera Drake [+see also:
trailer
film profile] , the tax credit level will be 20%, and on bigger films with budgets of £20m (€ 29.5m) + such as the Harry Potter series, it will be 16%.
-The tax reliefs will apply to the total amount of UK spend, which is similar to what exits in other countries, and not to the whole budget of the film as was previously the case.
-a more flexible system will allow producers to phase tax credits taking them either at the start of production or later when they are receiving profits from the film.
-the new regime will apply to film production companies responsible for the principal photography, post-production stages and for the completion of the finished film, a definition which will exclude the middlemen.
The new tax incentives will be introduced on 1 April 2006. They will apply to films which start filming on or after that date and to films which start before but which are not completed by 1 January 2007.

The major film organisations such as the UK Film Council (UK FC) and the leading producers association PACT warmly welcomed the announcement. "It’s the best news the British film industry has received for five years", said John Woodward, Chief Executive Officer of the UK FC.

Details of a new cultural test for British films which would provide the gateway to accessing tax relief where announced simultaneously by the UK Department for Culture, Media and Sport. (see other news from today).