British Film Industry Awaits Brown’s Decision On Tax Break Extension

by Robert Lee, Tax-News.com, London

19 August 2004

According to a report in the Observer, Chancellor of the Exchequer Gordon Brown is expected next month to grant a temporary extension to a favourable tax regime that has helped British film-makers reduce production costs and driven industry growth.

With an expert panel of film-makers, bankers and distributors having recently reported to Film Minister Estelle Morris, producers believe Brown is set to announce that the ‘Section 48’ tax measures will be prolonged until April 2006. These rules had been slated to expire next July.

Among other benfits the tax breaks, introduced in 1997, allow 100% tax relief on the production costs of British qualifying films spending up to £15 million, in addition to 100% relief on script development.

Despite a blip earlier in the year when the government unexpectedly announced the closure of a financing loophole, this system of tax incentives has served the British film industry well over the last few years.

During 2003, a boom year for British film-making, more than £1 billion was spent on 177 productions. It was estimated earlier in the year that the post-production industry in the UK now supports around 1,000 firms employing some 15,000 people.

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