Films boosted by tax relief despite crackdown

A system introduced two years ago to crack down on film industry tax abuse has still acted as a stimulus for film-making, claims the government.

Despite the crackdown, over £100 million in tax relief was allowed for the film industry according to new Treasury figures for 2008-09.

UK film production peaked at £1.16bn in 2003 and fell in 2004, after the former regime was criticised as an avoidance loophole for wealthy investors, but rose back to £840 million in 2006 as international film producers returned.

Financial Secretary Stephen Timms said the figures "are excellent news for the industry, highlighting the success of the UK’s film tax relief which is helping to stimulate investment in domestic film production".

"Film tax relief will continue to provide valuable assistance to this vibrant sector over the coming years," he added.

And the taxman claimed the statistics were also a success for the dedicated Film Tax Credit Unit, which it claimed made 95% of payments within six months.

Film tax relief is available to film production companies, based on the expenditure incurred in the production of films in the UK intended for theatrical release in commercial cinemas at up to 80% of the budget, with provision for those that fail to make a profit.

Creative industries minister Siôn Simon said: "The UK has been responsible for some tremendously successful films in the past year, both artistically and at the box office.

"Without film tax relief this level of success simply wouldn’t be possible, with many of the big hits of recent years never making it into production."

Eligible films must qualify as British, either by passing a cultural test administered by the Department for Culture or under an agreed co-production treaty and at least 25% of the total production expenditure must be incurred in the UK.

Further reading:

Profile: Alison Robinson, partner at Saffery Champness

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Profile: Richard Jones, FD of Cineworld