REV 4
7 March 2001
EXTENSION OF FILM TAX RELIEF
The British film industry received a boost today - worth up to £200m over 3 years - as the Chancellor announced that film tax relief would be extended until 2005.
Paymaster General Dawn Primarolo said:
?The British film industry has achieved great commercial and critical success in recent years, attracting 46 Oscar nominations since 1997, including Billy Elliot and Chocolat, nominated for this year's Oscars on 25 March.
?There is emerging evidence that film tax relief is encouraging long term structural change in the British film industry. There is growing confidence in the industry and, with the emergence of sustainable investment packages and record inward investment - over £500 million in 2000 - UK studios are busier than ever.
?A three-year extension of the tax relief will give the industry sufficient time to build on these encouraging developments.?
NOTES FOR EDITORS
The UK currently has three tax reliefs for films. The most important allows for 100 per cent write-off for tax purposes, on completion, of the production and acquisition costs of ?British qualifying? films whose budgets do not exceed £15 million. Films are certified as ?British qualifying? by the Department for Culture, Media and Sport if they meet certain criteria, such as 70 per cent of the cost of the film being spent on film activity in the UK.
This relief was introduced in 1997 and was originally intended to run for three years, so that it would apply to expenditure incurred between 2 July 1997 and 1 July 2000 inclusive. The closing date was subsequently extended in the Finance (No.2) Act 1999 to 1 July 2002.
Legislation will be introduced in the Finance Bill to extend the end date by a further three years so that it will then apply to expenditure incurred between 2 July 1997 and 1 July 2005 inclusive.
How the scheme works
Under the general scheme of taxation, expenditure on the production or acquisition costs of a film would normally become deductible over a considerable period of time. Each of the UK's three tax reliefs helps the film industry by advancing the time at which expenditure can be deducted for tax purposes.
The most generous relief allowing 100 per cent write-off of costs on completion of the film, commonly known as ?Section 48 relief?, was introduced in 1997. Its object was to promote growth, employment, investment and opportunities in the UK film industry. It was also intended to assist structural change in the UK film industry to assist it to compete in the global market.
British qualifying films with budgets in excess of £15million are entitled to deduct expenditure, on completion of the film, over three years - commonly known as ?Section 42 relief - This relief applied to all British qualifying films before Section 48 relief was introduced.
The extension announced today means that relief for expenditure on British films costing less than £15m between 2 July 2002 and 1 July 2005 will be available earlier. This brings forward nearly £200m of relief.
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