TaxCorporate TaxBudget follow-up: Uncertainty prevails over film reliefs

Budget follow-up: Uncertainty prevails over film reliefs

A change to the way that tax relief is offered to the British film industry will see more benefits going directly to film-makers, but could still damage the industry.

Link: Budget 2004

In his Budget speech, chancellor Gordon Brown outlined how the changes would work, which included a higher relief rate of 20%.

‘Since 1997 support for the British film industry has been worth £2bn and the number of films made here in Britain has doubled,’ said Brown. ‘I propose to transfer the available reliefs for British made films with budgets below £15m from the third parties, a minority of whom have abused them, and to pay reliefs directly to the film-makers themselves. The new relief, will be set at a new and higher level of 20.’

Full details of the plans are still to be unveiled and many are waiting to see what will emerge before the true nature of the move is understood, but there are concerns that the number of promoters and distributors in UK film could be drastically hit.

‘Our initial concern is that this change to relief could take away one of the most crucial parts of the process, namely the market makers,’ said David Kilshaw, tax partner at KPMG. ‘It may raise the profile of the production houses but quite often their skill set is not as developed as these market makers in getting a film out there and making it successful.’

Others however, were more optimistic about the rough details presented so far.

?There have been complaints that some of the schemes in the past have lined the pockets of the promoters, even from some promoters,’ said Chris Mator, media and entertainment tax partner at Deloitte. ‘The economic impact is difficult to judge but it should mean less money leaked out to promoters and managers of schemes.’

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