As part of his Autumn Statement, George Osborne has today announced that – subject to State aid approval – with effect from April 2014, the rate of film tax credit will be 25% on the first £20 million of qualifying core expenditure for all qualifying film projects and 20% thereafter (subject always to a maximum of 80% of qualifying core expenditure). Effectively removing the existing distinction between large and small budget films, the proposed changes should encourage an increased number of larger budget films into the UK market.
The Chancellor also announced that the minimum UK expenditure requirement in order to qualify for the film tax credit will be lowered from 25% to 10% which should help to encourage more minority co-productions into the UK where the proposed UK spend is less than 25%.
Furthermore, in line with the recently introduced TV and animation tax credits, changes will be made to the cultural test for film tax relief making it a European, rather than a strictly British, cultural test. Additionally, the new scoring system will require a pass mark of 18 out of a possible 35 points, with an increase in the points available for principal photography, special effects, visual effects and the English language.
Finally, the Chancellor also pledged £5 million in funding for National Film & Television School’s Digital Village and announced that a consultation will be launched in spring 2014 regarding the possible introduction of tax reliefs for commercial theatre productions and theatres investing in new stage plays and regional touring productions.