Building on last year’s announcement to introduce an animation and high end television tax credit in the UK, the Chancellor today confirmed the Government’s commitment to the creative industries by announcing improvements to the existing UK film tax credit which are also designed to boost the UK visual effects industry.
Subject to state aid approval, the following changes will take effect from April 2014:
- the higher 25% rate of film tax relief will be available on the first £20 million of qualifying core expenditure (and 20% thereafter) on small and large budget films (previously the higher 25% rate was only available for films with a production budget of £20 million or less);
- the minimum UK core expenditure requirement for films will be reduced from 25% to 10% so that only 10% of a film’s budget must be spent in the UK to qualify for the film tax credit; and
- the cultural test will be amended to bring it in line with the more European based test adopted under the animation and high end television tax credits so that points are awarded for European rather than only British content. In addition, the number of points available for principal photography, special effects, visual effects and films in the English language will be increased.
We are delighted to see these changes being proposed which should encourage the US studios to undertake more visual effects work and production in the UK.
In addition the Chancellor intends to:
- request that the higher 25% rate of film tax relief apply to all qualifying expenditure when the film tax credit is re-notified to the EU in 2015; and
- consult in spring April 2014 on the introduction of a limited corporation tax relief for commercial theatre productions and targeted tax relief for theatres investing in new works or touring productions to regional theatres.