As expected, the British government has confirmed changes to its film tax incentives that were originally outlined in December. The UK’s Chancellor of the Exchequer, George Osborne, presented the 2014 budget to Parliament this afternoon and noted that the European Commission has approved the expansion of the tax break scheme. Beginning April 1, the minimum UK spend required to access the coveted film tax relief will drop from 25% to 10%. The tax break itself will be worth 25% on the first £20M ($33.2M) 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. (Osborne also said today that he would apply the film tax relief model to theater, giving a 20% break to qualifying productions and 25% to regional touring shows.)
The government has previously said it will seek to clear an increase to 25% for all qualifying expenditure on larger budget films in 2015. With the amount of Hollywood tentpoles being shot in the UK, it’s good news for producers, especially at a time when there is so much controversy in California over the tax credit bill. Legislation introduced in February to expand the California credit program includes eliminating the $75M budget cap on eligible productions which is engineered to bring big movies back to the state. In the meantime, the studios are camped out in Britain on both the film and TV fronts.
But the new rules going into effect next month are also good news for the indies. Dropping the spend requirement to 10% lowers the barrier of entry for qualification. It also may mean more work for the increasingly vibrant post-production and VFX sectors. Overall, the moves are positioned to drive inward investment which was a staggering $1.43B in 2013. Meanwhile, the soundstage space crunch continues, although many TV shows are shooting in converted warehouses. Or, as the Disney Channel just announced this week, renting a Jacobethan manor.