UK launches a 40% tax relief for films budgeted up to £15m

UK-qualifying films budgeted up to £15m will receive 40% tax relief following the introduction of the’indie tax credit’, which aims to reinvigorate the homegrown production sector.

7 MAR 2024

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The UK government has announced a series of tax reductions and incentives for the audiovisual production industry, aiming to establish a 'game-changer' in its development. The British Chancellor, Jeremy Hunt, unveiled the changes in the Spring budget. The reliefs for visual effects will begin in April 2025. The total relief rate for UK visual effects has now been boosted to 39%. A 40% reduction in business rates for studio facilities in England has also been introduced. Films and high-end TV (HETV) programs currently have a headline credit rate of 34%. This equates to 25.5% in actual relief, capped at 80% of core expenditure, but with no budget limit. The Audio-Visual Expenditure Credit (AVEC), a reform from the film and TV tax relief system, came into play at the start of this year and equated to a small increase on the 25% previously available.

Hunt provided context on the state of the industry in the UK and shared some details: "I committed to providing more tax relief for visual effects in film and high-end TV. I can today confirm that we will increase the rate of tax credit by 5% and remove the 80% cap for visual effects costs in the audiovisual expenditure credits. We have become Europe's largest film and TV production center, with Idris Elba, Keira Knightley, and Orlando Bloom all filming their latest productions here. Studio space in the UK has doubled in the last three years, and at the current rate of expansion, next year, we will be second only to Hollywood globally," explained.

Additionally, the authority commented on how the agreements were established: "Having worked closely with the culture secretary and listened carefully to representations from companies like Pinewood, Warner Brothers, and Sky Studios, we will provide eligible film studios in England with a 40% relief on their gross business rates until 2034. And having heard representations from the British Film Institute, Pact, and indeed the prime minister, we will introduce a new tax credit for UK independent films with a budget of less than 15 million pounds," specified.

This establishes a long-awaited audiovisual incentive. Calls for enhanced support for the ailing UK independent production sector have been ongoing for several years, with the producers' organization Pact playing a key role in lobbying efforts, initially proposing the 40% figure in 2017. An enhanced tax credit has been a focal point in written submissions and ongoing oral evidence presented to the UK Parliament's cross-party Culture, Media, and Sport (CMS) committee. Those advocating for it are Pact, the BFI, Film4, BBC Film, Creative UK, Screen Scotland, Producers' Collective UK, Paramount, and the Screen Alliance North.