U.K. Government Considers Merging, Updating Film and TV Tax Reliefs

The British government has launched a consultation into U.K. film and TV tax reliefs.

The proposals in the consultation aim to “simplify and modernize the reliefs, boost growth in the sectors and ensure the reliefs remain sustainable,” according to the consultation summary.

The main proposals likely to affect the industry are the suggestion of merging the film and high-end TV tax credits and adjusting some of the qualifiers of the high-end TV tax credit, in particular raising the minimum expenditure threshold.

In terms of the merger, the government suggests the film tax relief, animation tax relief, high-end TV tax relief and children’s TV tax relief should be combined in order to simplify the process. The proposals stress that the criteria companies must meet to access the reliefs will not be changed. Nevertheless, the government is keen to ensure there are no “unintended consequences” arising from the merger and are requesting feedback from the industry.

The proposals also suggest a number of changes to the high-end tax relief, most significantly raising the minimum expenditure, which is currently £1 million ($1.2 million). That figure hasn’t changed since the tax credit was first introduced in 2013 and the government suggests it “no longer reflects current productions costs.”

With both global and market inflation vastly impacting production budgets, attempts to raise the minimum expenditure figure will be of concern to industry as it means that many productions will no longer qualify for the tax credit. However the government’s position is that the tax relief was intended to encourage the creation of shows that “would not have been commissioned in its absence.”

The proposals also suggest adjusting the minimum slot length requirement, which currently, the consultation document suggests, is not consistently interpreted by the industry. The government proposes removing the requirement entirely or amending it from 30 minutes to 20 minutes and applying on an episode-by-episode basis.

They also plan to define documentaries more narrowly. At the moment, because “documentaries” are not defined in the legislation, the consultation document complains that some of the productions applying for the relief are “borderline reality television.” The government says it will likely use the British Film Institute’s (BFI) guidance to define what constitutes a documentary. Currently the guidance states that a documentary is “a factual or realistic programme based on real events, places or circumstances and intended to record or inform.”

The government has asked for as many responses from industry individuals, companies and professional bodies as possible to the consultation. In particular they are interested in hearing from production companies, accountants, tax advisors and lawyers.

The BFI’s depity CEO Harriet Finney responded to news of the consultation, saying: “Our world leading screen sector contributes more than £13 billion to the U.K. economy and over 200,000 jobs, and it is underpinned by the successful film, high-end TV, animation, children’s TV and video games tax reliefs. The launch of the ‘Audio-visual tax reliefs: consultation’ demonstrates that the government recognises the value of the sector, and sees its huge potential for further growth and job creation. We welcome the consultation and will continue to work closely with Government and our industry partners to support improvements to these incentives to ensure they deliver the best possible return on investment for the U.K. economy.”

The introduction of both the film and TV tax credits in the mid 2000s-2010s revitalized the U.K. screen industry, as the consultation document acknowledges, paving the way for award-winning productions from “The Crown” (pictured above) to “Ted Lasso,” “Belfast” and more.

Check out the full proposal document here.

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