HISTORIC PRESS RELEASE : Treasury announces new tax relief for British films [September 2004]

The press release issued by HM Treasury on 21 September 2004.

A new permanent, more generous tax relief for small British films will ensure the ongoing success of the British film industry, Paymaster General Dawn Primarolo said today.

The new tax relief, to be unveiled at a No.11 Downing Street reception for leading representatives of the British film industry, will replace the old Section 48 relief, which is due to expire in July 2005.

Launching the new tax relief, Dawn Primarolo, said:

“2003 was a record year for film production in the UK and employment in the film and video industries has increased by over 75 per cent in the last decade.

“We now want to build upon the success of the old Section 48 relief in supporting the production of British films and creating investment and employment opportunities in the industry.

“This new, more generous relief will ensure that the UK continues to be recognised as one of the best places in the world to make a film.”

Estelle Morris, Films Minister, said:

“This new tax relief underlines the Government’s commitment to a stable, sustainable and successful film industry that will go on producing award-winners like Mike Leigh’s Vera Drake.

“In particular, the relief delivers on our determination to remain a major centre for international film-making. Our ongoing Review of the UK’s co-production treaties will produce a set of re-focused and fit-for-purpose agreements which the industry wants and needs. Announcements on the progress of this Review will be made later in the year.

“We will also continue working closely with the UK Film Council to improve distribution of British films, building on their excellent work to date in ensuring that home-grown cinema gets seen by as wide an audience as possible.”

John Woodward, Chief Executive Officer of the UK Film Council, said:

“Film makes a major contribution to our economy and to our culture. Obviously, as with Section 48, the new tax credit will take a few months to bed down but it is extremely good news that the new relief will apply to 100 per cent of the film’s costs – rather than just the money spent in the UK.

“The increase in the budget of films which qualify for the tax credit from £15 million to £20 million is also very much welcome.

“As well as securing this vital and effective support for film production, we now look forward to continuing discussions with the Government on the shared policy goal of improving the distribution of British films in the long term.”

Key features of the new relief include the following:

• the money will be paid direct to film-makers, not through third parties, so it will be less open to abuse;
• the relief will cover 20 per cent of production costs compared to the 15 per cent covered by the old Section 48 relief;
• films with budgets of up to £20 million will be able to benefit, compared to a limit of £15 million under Section 48;
• for the first time, the relief will include an added incentive for films to be profitable;
• the relief applies to all production expenditure, not just that spent in the UK; and
• the maximum relief which can be claimed on a qualifying film will rise typically to £4 million compared to £2.25 million under Section 48

The new relief will come into effect from July next year, but details are being announced today so that the industry can plan the finances of films in development with confidence about what the tax arrangements will be when those films are completed.

The new relief will be unveiled at a reception hosted by Dawn Primarolo at 5.30pm at 11 Downing Street, to be attended by Estelle Morris, Sir Alan Parker, Lord Attenborough, Tim Bevan, Andrew MacDonald, Barbara Broccoli and several of Britain’s other leading film producers.