New Tax Breaks Expected To Boost UK Film Industry

by Robert Lee, Tax-News.com, London

18 September 2006

The head of the UK's Pinewood Shepperton studios has predicted a brighter future for the British film industry now that a new set of tax incentives has been established.

Commenting on the company's first half financial results, Ivan Dunleavy, chief executive, said that he expects more big budget productions to come to Britain in the years ahead after a period when uncertainty surrounding the industry's tax regime saw production companies using more foreign studios.

"With the passing of the legislation to implement the new UK film tax relief and clarity over UK film fiscal policy, we expect to see a return to a more normal film production environment by the end of 2006 with larger film productions once again committing to filming in the UK for the future," he stated.

Pinewood Shepperton, one of Europe's largest and most popular studio complexes, reported an improved operating profit of GBP3.6 million (US$6.8 million) for the first six months of 2006, up from GBP1.4 million in the same period last year.

Total expenditure by the industry in the UK fell to GBP700 million last year from a peak of GBP2.2 billion in 2003 after it emerged that the government was going to replace the previous set of tax breaks, known as Section 48.

Under the new tax breaks, introduced in April, productions must satisfy the Treasury that they are British through a points system. Films must score a minimum of 16 points out of a possible 42 points to qualify for the tax scheme, which grants an enhanced deduction of 100% for films with a budget of up to GBP20 million, and 80% for more expensive productions. Using a studio such as Pinewood gives films nine points towards their total.

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