LONDON — The British film industry has been boosted by the renewal of Section 48 tax relief for another three years. This allows 100% of the investment in a British movie costing up to £15 million ($21 million) to be written off against taxes in the year of production.

Introduced by the incoming Labor government in 1997 and due to expire in April 2002, this scheme has been extended to April 2005.

It has proved singularly successful in funneling huge volumes of personal wealth, mostly from City of London fat cats, into the film industry. Section 48 relief was applied to $700 million of production in the 1999-2000 year alone.

The net benefit to filmmakers is only a fraction of that figure, but a significant one nonetheless. Sale and leaseback schemes — the primary means of exploiting the tax break, under which the investor takes no direct risk — typically pay producers about 12% of a film’s budget if arranged after the pic is complete, or 10% if before.

The tax break also has encouraged a growing volume of risk investment by wealthy individuals, through producers such as Visionview and Ultimate Pictures.

Future Film Group and Grosvenor Park are using tax breaks as the foundation for an innovative range of film financing techniques. According to FFG’s managing director, Tim Levy, the renewal of Section 48 relief “will result in new, well-capitalized, quoted, vertically integrated film studios emerging in the next three years.”

Separately, Section 42 relief (introduced in 1992) allows investments above $21 million to be written off over three years. This primarily benefits Hollywood studios shooting U.K. blockbusters, and is one of the factors that boosted inward investment from $83 million in 1992 to $769 million in 2000.

The Film Council, which took over from the previous patchwork of public financing agencies including British Screen Finance and the Arts Council of England, has $29 million a year in lottery coin to invest as equity in Brit pics.

Three production companies — the Film Consortium, Pathe Pictures and DNA Films — are halfway through six-year lottery franchises, which give them each access to about $7.5 million a year in lotto coin.

Scottish Screen has $4 million in lottery cash, and there’s also a smattering of coin from Glasgow Film Fund, Welsh screen agency Sgrin and the Northern Ireland Film Commission. But the biggest regional funder is the tiny Isle of Man Film Commission, which invests around $7.8 million in six pics a year (of any nationality) that shoot on the island.


Section 48 tax relief: allows 100% writeoff of investment in British movies budgeted up to $21 million

Section 42 relief: allows all investment in British movies to be written off over three years

Film Council: $29 million a year in lotto coin — $14 million for commercial movies, $7.5 million for experimental cinema, $7.5 million for development

Lottery franchises: Film Consortium, Pathe Pictures and DNA Films have a combined $131 million in lotto coin over six years to co-finance Brit pics.

Isle of Man Film Commission: $7.8 million in equity investment

Scottish Screen: $4 million in lotto coin for production


Banks: ABN Amro (Diane Stidham); Barclays Bank (Jeff Salmon); Bank Leumi (Robert Sherr), Banque Internationale a Luxembourg (Gillian Duffield); Coutts & Co. (Chris Collins, Judith Chan); DG Bank (Martin McCourt, Bernard Trainer); Nat West (Alan Wilkinson); Royal Bank of Scotland (Lee Beasley); Societe Generale (Premilla Hoon)

Attorneys: Denton Hall Wilde Sapt (Ken Dearsley); Harbottle & Lewis (Bob Storer); Lee & Thompson (Jeremy Gawade); Olswang (Mark Devereux, Libby Saville); Richards Butler (Richard Philips); S.J. Berwin (Nigel Palmer, Tim Johnson); Theodore Goddard (Jonathan Berger); and Davenport Lyons

Tax financiers: Baker Tilly; Future Film Group (Tim Levy); Centre Spur (Timothy Nicholas); Ernst & Young; Grosvenor Park (Don Starr, Andrew Somper); Ingenious (Patrick McKenna); Matrix (Mohammed Yusef); Visionview (Jim Reeve)


“Buffalo Soldiers” (FilmFour, Good Machine, Odeon Film), directed by Gregor Jordan, $13 million including $3.3 million from Grosvenor Park ($1.3 million for sale and lease-back, $2 million in equity)

“Gosford Park” (Capitol Films, USA Films), directed by Robert Altman, budget $19.8 million including $2.8 million from the Film Council

“Last Orders” (Scala), directed by Fred Schepisi, $12 million including $2.4 million from Future Film Group for S&L plus U.K. rights

“Me Without You” (Dakota Films, Wave Pictures), directed by Sandra Goldbacher, $5 million budget including contributions from the Isle of Man Film Commission and British Screen Finance

“Morvern Callar” (Company Pictures, Alliance Atlantis), directed by Lynne Ramsay, $6 million including $700,000 from Scottish Screen and $400,000 million from the Glasgow Film Fund

“Quicksand” (Visionview), directed by John MacKenzie, $10 million from Visionview’s equity fund