pinewoodThe UK is already busting at the seams trying to accommodate all of the TV and film productions flocking there. With adjustments to film tax incentives that were announced today, it’s just upped the ante as a desirable place to work. British Chancellor of the Exchequer George Osborne delivered the Autumn Statement to Parliament this afternoon, outlining new economic policies that will go into effect from April 1, 2014. In an incentive that lowers the barrier to entry, the government plans to reduce from 25% to 10% the minimum UK expenditure required in order to access the coveted film tax relief. From April, the relief will be worth 25% on the first £20M of qualifying production spend, and 20% thereafter. (The rebates are available on the lower of either 80% of total core expenditure or the actual UK core expenditure and there is no cap on the amount that can be claimed.) That last measure will benefit producers of bigger budget films who’ll get an extra £1M on the first £20M. The government said it will seek to clear an increase to 25% for all qualifying expenditure on larger budget films in 2015. That should keep Hollywood tentpoles keen on Britain, especially given the concern over California’s Film/TV Tax Credit program which currently excludes features with budgets over $75M.

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Dropping the spend requirement to 10% is going to help the independent sector, too. John Graydon, partner at accounting firm Saffery Champness which specializes in film and TV tax incentives, tells me, “If a producer just wants to do post in the UK, trying to get to that 25% spend was incredibly difficult. So in some cases, they went elsewhere.” Now, those seeking to do just post or VFX in Britain will have a better shot at making the numbers work. There are also changes to come to the cultural test which determines eligibility for tax relief. The test will be modernized to allow for European as well as British elements. It will become a 35 point barometer with a pass mark of 18 and will include an increase in the points available for principal photography/special effects/VFX and projects in the English language.

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diagon alley leavesdenOverall, the moves are positioned to drive inward investment. In the first three quarters of 2013, it’s already up 28%. That’s partly due to a lucrative TV tax credit that offers a rebate on high-end dramas costing £1M or more to produce per hour. But with soundstages filled to the rafters, many TV productions are already being relegated to converted warehouse space. It’s also because several big budget Hollywood films are camped out at Pinewood and Warner Bros’ Leavesden Studios. But if Pinewood doesn’t get approval for its expansion plans next year, more big ticket pics could be turned away. As I recently reported, Marvel’s Ant Man was forced out of the UK due to space constraints. Graydon doesn’t see the new incentives as necessarily exacerbating the capacity issue since those enticed by the changes won’t always be the kinds of productions that would require soundstages. He does allow, however, “Stage space is an issue. We absolutely want to see that resolved as quickly as possible.”

There is also an element to the new proposals that says the government will invest £5M in the National Film and Television School’s Digital Village, to expand and upgrade its existing facility into a world-class training center and help provide a sustainable supply of UK talent for the digital and creative industries. Alex Hope, managing director of VFX house Double Negative whose credits include The Hunger Games: Catching Fire, Rush, Thor: The Dark World and Captain Phillips, welcomed the changes. “Adjusting the film tax relief so that it reflects changes in the production process will enable the UK industry to capitalize on its strengths in VFX and cutting-edge production technologies.”

The British Film Institute and the British Film Commission also both welcomed the news. Adrian Wootton, chief of the BFC and Film London, said, “In order to continue to attract business to the UK in a fiercely competitive global marketplace, our industry must be underpinned by effective fiscal incentives. The tax relief was a game changer when introduced in 2007 and today’s announcement ensures we can continue to grow our industry, boosting the UK economy and creating British jobs.”