LONDON — The U.K. government has sweetened incentives for the film, TV and videogame industries as part of its annual budget statement, announced by Chancellor George Osborne on Wednesday.
The government has increased the rate of film tax relief to 25% for all qualifying expenditure. This measure improves the relief for films with a qualifying budget of £20 million ($29.3 million) or over. Previously, the rate of tax relief for those films was 25% of the first £20 million ($29.3 million) of qualifying U.K. expenditure, with any excess qualifying U.K. expenditure receiving a 20% tax credit.
There is no change for films with a total core expenditure of £20 million ($29.3 million) or less. Production companies for those films are already able to claim a cash rebate of up to 25% of U.K. qualifying film production expenditure.
“Against increasing global competition for large-budget films, this is great news for the U.K. film industry,” John Graydon, partner at accountancy firm Saffery Champness, said. “On a film costing $100 million the producers will receive up to $2.5 million additional tax relief.”
As expected, the government has extended the high-end television tax relief by reducing the minimum U.K. expenditure requirement from 25% to 10%. It has also announced that it will “modernize” the cultural test, which is used to judge whether a film or TV show qualifies for support.
Many Hollywood productions have benefited from the U.K. tax credit. Among those films last year to be certified as British, and thus eligible for the tax relief, were “Guardians of the Galaxy,” “Maleficent” and “Thor: The Dark World.”
The government is introducing a new children’s television tax relief from April, which will include children’s programs that are game shows or competitions, Osborne announced Wednesday.
All these changes in tax relief will need the approval of the European Commission.
To invest in skills and business development in the creative industries, the government will also extend the Skills Investment Fund, providing £4 million ($5.87 million) to “ensure that it can continue to match fund support for training and development in film, television, visual effects, video games and animation for a further two years.”
It will also “promote a vibrant business environment” for new and growing video-games companies across the U.K. by committing £4 million ($5.87 million) to a new Video Games Prototype Fund over the next four years; this fund is “designed to aid access to finance and business support, and to target games development talent.”
British Film Institute CEO Amanda Nevill welcomed the boost for the local industry. “Today’s budget demonstrates the government’s continuing commitment to screen industry reliefs, which do so much to benefit the U.K.’s screen industries and the U.K. economy overall,” she said in a statement. “This welcome support, alongside lottery funding for talent and skills development, is vital to the ongoing growth and success of the U.K.’s burgeoning and world-leading creative industries.”
Adrian Wootton, chief executive of the British Film Commission and Film London, said: “The U.K. is a creative powerhouse, and today’s enhancements can only help our screen industries go from strength to strength. Governmental support has proven invaluable, so the new Children’s Television Tax Relief is an incredibly positive step. Similarly, the enhancements to the High-End Television, Animation and Film Tax Reliefs will make the U.K. an even more popular destination for international clients and potential co-producers. This, of course, will in turn help our award-winning infrastructure thrive while creating new jobs and encouraging new investment.”