TaxCorporate TaxNew film tax credits set to roll

New film tax credits set to roll

Leading figures behind the financing of films in the UK are expecting the chancellor to introduce film tax credits in his Budget next month.

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The predictions come less than a month after the government moved to close a tax loophole, prompting a storm of protest from the film industry.

The Inland Revenue has already said that details of a new tax relief scheme will be announced by Gordon Brown on 17 March to replace the existing section 48 legislation, which expires in 2005.

This, it is hoped, will also deal with the fallout from the loophole closure, which has created confusion and panic among some film financiers.

Christine Corner, head of the film and television group at Baker Tilly, said she expected an announcement about the introduction of film tax credits linked to expenditure in the Budget speech.

Although the details are still unclear, Corner told Accountancy Age how they might work in theory. ‘The film producer would complete his film as normal.

‘If it cost £1m to make, he would get a tax certificate for this amount. This could then be sold on to investors who would qualify for tax relief on this investment.

‘Tax credits may also be granted on such things as the distribution and advertising of films,’ she said.

The idea of a film tax credit also has the backing of Tim Levy, chief executive of the Future Film group, which has raised more than £1.25bn since to finance films in the UK.

Levy, who has taken some in the film industry to task for using what he calls ‘aggressive financing schemes’, said he was in favour of the introduction of tax credits.

‘Tax credits should be linked to film spend,’ he told Accountancy Age.

The Revenue has so far refused to grant a transitional period to allow films that have financing in place to enjoy the benefits of the loophole.

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