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USD1bn Claimed In UK Film Tax Relief

by Jason Gorringe, Tax-News.com, London

19 December 2011


HM Revenue and Customs (HMRC) has released a summary of film tax credit take-up, showing that claims worth GBP645m (USD1bn) have been made since the scheme was introduced.

The UK's current film tax relief regime was introduced in January 2007 to promote the sustainable production of British films. HMRC's newly published summary details the take-up, cost and delivery of the relief, and covers the whole period of operation up to the end of the 2010/11 financial year. It is based on information reported by May 31, 2011 about claims received and payments made.

On films with a total core expenditure of GBP20m or less, the production company can claim a payable cash rebate of up to 25% of the UK qualifying film production expenditure. This reduces to 20% for those films with a core expenditure of more than GBP20m. A minimum of 25% of costs must be spent on UK qualifying production expenditure. Qualification for the relief is administered by the British Film Council.

Since the scheme's inception, 760 film productions have become eligible to claim the credit, and, of these, 650 film productions have made 1,080 claims, for a total of GBP645m. To date, 955 claims, made by 585 films, have received payments worth GBP570m.

The total production expenditure by films claiming the relief was GBP5bn, of which 75% was incurred in the UK. Production expenditure on large-budget films averaged GBP82.9m per film, and GBP2.5m for limited-budget films.

330 films made just one claim, while 315 made two or more, covering different accounting periods. 9% of claims (100 in total) were made by large-budget films, while 980 were made by limited-budget films. Claims by large-budget films totalled GBP390m, with claims by limited-budget films reaching GBP255m.

Since the scheme was launched, payments to large-budget films have totalled GBP340m, and to limited-budget films, GBP230m. In 2007/08, GBP105m was paid out, with GBP145m granted in 2008/09, GBP125m in 2009/10 and GBP200m in 2010/11. Tax credit payments to large-budget films averaged GBP3.7m per claim, and to limited-budget films, GBP0.3m.

57% of tax returns with a claim for film tax relief were filed within six months of their accounting period end, with this proportion reaching 86% for 2010/11. Of the 955 payments made, 32% were made within one month of HMRC receiving the return, 78% within two months, and 96% within six months.

A comprehensive report in our Intelligence Report series examining tax-sheltering arrangements for investors, including Venture Capital, Forest Finance and Film Finance in a number of key jurisdictions, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report5.asp
TAGS: tax | business | film finance | tax incentives | law | accounting | corporation tax | United Kingdom | tax credits | cultural heritage | revenue statistics

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