After a prolonged consultation, the government has decided that new tax reliefs for the production o...
After a prolonged consultation, the government has decided that new tax reliefs for the production of "culturally British" films are to come into effect in April 2006.
The new reliefs offer an enhanced deduction of 50% for films costing less than £20m, and 25% for a budget above that limit. Additionally, producers can surrender losses derived from expenditure that qualifies a production as British in exchange for a payable tax credit.
The credit is 30% for films costing up to £20m, and 25% for those costing more.
To be classified as "culturally British", at least 40% of production costs have to be spent in the UK, and films are scrutinised by a points system. The latter rewards the use of British content, facility and locations, and engaging local talent. Films must score a minimum of 15 points.
The existing reliefs will expire from 31 March 2006, although productions completed before 1 January 2007 will still be partially eligible.
These percentages are applied to qualifying UK production expenditure, although subject to a ceiling of 80% of total production expenditure.
To encourage film-makers to adopt a slate approach, film losses arising from the new relief will be available to set against income from film exploitation generally.
To find out more about the Enterprise Investment Scheme, go to www.hmrc.gov.uk/stats/ ent_invest_scheme/eis_b_1.htm
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