LONDON — The British government has boosted the local film industry by extending a tax break on production for another three years.
The 100% writeoff for investment in British movies had been due to expire in 2002, but will run until 2005.
The decision, announced by Chancellor of the Exchequer Gordon Brown in his annual budget speech, matches the industry’s most optimistic hopes.
Many in the biz had feared that the incentive would not be renewed at all and lobbyists were begging the government for at least one or two more years.
Buffing the biz
“It’s fantastic news,” said Richard Holmes, managing director of production house Civilian Content. “They asked for two years and got three. The chancellor is obviously a film buff.”
Since it was introduced in 1997, the tax break has significantly boosted private investment in film production and helped to attract Hollywood studios.
The Film Council estimates that in the 1999-2000 tax year, films costing £500 million ($725 million) benefited from the tax relief.
Council chief exec John Woodward described the tax break as “vital to the recent resurgence of film production in the U.K.”
To date, the writeoff has largely spurred private investors to increase the volume of film production. But the renewal of the scheme could encourage institutional investors to throw their weight behind film companies that are using the tax relief as a foundation to build mini-studios.
Future Film Group and Grosvenor Park are companies attempting to do just that.
FFG chief exec Tim Levy commented: “This is going to result in city money coming into the film industry. We are going to see new public entities in the U.K., and hopefully the creation of vertically integrated companies.”
Andrew Somper of Grosvenor Park said, “This massively increases our ability to have a very plausible story for investors.”
Separately, the chancellor announced plans for tax relief on intellectual property and the abolition of withholding levies on royalty payments between British companies. Both moves could benefit the entertainment industry, although that will not be clear until more details are confirmed.