TaxCorporate TaxFilm industry set back by new tax system

Film industry set back by new tax system

New government tax relief for films look set to reduce benefits to Hollywood

Experts have speculated that recently revealed government policies on tax
relief for film production may drastically reduce the benefits available to
Hollywood producers.
According to reports in The Times, tax benefits of as much 9% could be
cut to as little as 2% when the government abolishes the existing system.

Observers speculate that the new measures could drive Hollywood producers to
take their work overseas.

The Treasury revealed at the end of July plans to reform the so called
sections 42 and 48 tax rules to allow relief of up to 24% on films that are
deemed culturally British. The relief could amount to as much 36% on profits
reinvested in further productions.

The Times reports that media law firm Olswang believes that the
benefits will be considerably less once they have been processed through complex
film financing structures.

Olswang believes a £100m budget will attract benefits of just 2% while the
relief for a British movie costing less than £20m will gain between 12% and 17%.

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