CANNES — The U.K. Film Council, BBC Films and Film4, the three principal public funders of feature films in Blighty, have agreed to give British indie producers an equity stake in their own movies.
After months of negotiation with producers’ org PACT, the three financiers have jointly announced that they will treat the U.K.’s new tax credit as the producer’s investment in a movie.
The net value of the tax credit will typically be worth 10%-18% of a film’s budget. Producers of British films backed by the UKFC, the BBC or Film4 can thus expect to recoup proportionately alongside any other equity investors.
This ground-breaking agreement is intended to give producers a real chance to build up significant assets in their companies, rather than living from hand to mouth on production fees. However, deals on individual projects will still have to be negotiated between the producer and all the financiers.
“This is a real step change for British independent producers,” said UKFC chief exec John Woodward. “For the first time, we will all start with the principle that the net value of the tax break … belongs to the producer, not the film’s financers. We still have to make our numbers add up, but this is a big shift in attitude and approach from the old sale-and-leaseback days where the tax subsidy was used solely to the benefit of financiers to reduce their investment.”
Rebecca O’Brien, acting chair of the PACT film policy group, said, “This initiative is of great importance to independent film production companies — it presents us with a unique opportunity to begin to build viable businesses and to become effective partners in our industry.”
When the government announced that it was replacing the old Section 42/Section 48 tax relief with the new tax credit, its stated intention was to ensure that producers received the benefit, rather than the financial middlemen who prospered under the old schemes.
David Thompson, head of BBC Films, said, “We really hope it’s going to do something positive to help build the sustainability of film production in this country.”
Film4 topper Tessa Ross added, “At Film4, we need our producing partners to be strong, and we hope that this initiative will boost the entire sector and allow producers to move onto even bigger and better things (with us, hopefully!).”