Pact, the BFI and the BFC have welcomed today’s budget which saw Chancellor Jeremy Hunt maintain the qualifying threshold for high-end audio visual tax credits at £1m.

UK tax reliefs are to be remodelled as expenditure credits

Hunt introduced rises in expenditure credit, with a rate of 34% for film, high end television and video games and 39% for the animation and children’s TV sectors.

“This government’s audio-visual tax reliefs have helped make our film and TV industry the biggest in Europe,” said Hunt. “Only last month, Pinewood announced an expansion which will bring another 8,000 jobs to the UK.”

The announcement follows the HM Treasury consultation on changes to the tax reliefs relating to film, high end TV, animation, children’s television and video games published in November.

Ben Roberts, Chief Executive BFI said: ‘We welcome the Chancellor’s news today of the reformed Expenditure Credits across our screen industries, a testament to how crucial they are to the UK’s economy and growth. Combined with our extraordinary talent, infrastructure and technical and creative expertise the screen sector Tax Reliefs, now remodelled as Expenditure Credits, have super charged our industry on an unprecedented scale. The news today will ensure the UK remains a truly globally competitive production hub, giving us economic recovery and growth, creating thousands of jobs for people up and down the country and enabling creative talent and storytelling to thrive.

“It’s good news that the high end TV threshold has been preserved. I am particularly heartened to see a much needed boost for children’s television and animation as two areas of cultural and societal importance in which the UK excels creatively, but that still have significant growth potential. I look forward to reading the further detail in the draft legislation that will be published this summer.’

At the core of the reforms is the decision to move all five reliefs to a refundable expenditure credit model. The audio-visual expenditure credit will cover the current film and TV tax reliefs and the video games expenditure credit will cover the video games tax relief.

Under the audio-visual expenditure credit, film and high end TV (HETV) will be eligible for a credit rate of 34%. This is slightly higher than the equivalent credit relief under the current regime, which would have been 33.33%. The video games expenditure credit will also have a credit rate of 34%. Animation and children’s TV will have a credit rate of 39%, which is a significant increase in the generosity of relief when compared to the current regime.

In a statement, Pact also welcomed the outcome of the consultation. In December 2022 Pact submitted a substantial report on children’s and animation TV tax credits to Government recommending an increase to the current tax relief. Therefore Pact is pleased to see the level raised from 25% to 39% which should help stimulate investment in children’s and animation content and build on the success of the existing tax credit.

Pact also welcomes the fact that the Government has listened to concerns raised by both Pact and UK broadcasters about raising the minimum expenditure threshold for HETV tax relief.

Pact provided evidence to the Government to show that raising the threshold would damage domestic production, particularly regional productions, comedies and documentaries as these productions often have lower budgets, and would also result in fewer British dramas and in particular comedies being made in the UK.

Adrian Wootton OBE, Chief Executive of the British Film Commission, said: “Today’s announcement is a real recognition from the Government of the growth and opportunity our UK Film and High-end TV industry presents. The UK’s tax reliefs have directly influenced many productions’ decisions to base themselves in the UK, contributing billions of pounds to the economy and hundreds of thousands of jobs across the UK’s nations and regions. With increasingly intense international competition, we’re delighted to welcome this package of measures, future-proofing the UK’s film, High-end TV and animation tax credits and our position as a leading global production hub.”

“While much of the detail is yet to be worked through, today’s announcement demonstrates a strong commitment from Government to continuing to support the growth of our film and TV sector, creating jobs and opportunities in all four UK nations and region for years to come”.

Bectu also welcomed the tax relief announcements, but was disappointed not to see help to improve pay and conditions in the creative workforce. Head of Bectu Philippa Childs said: “The government must match its support for businesses with a real plan to improve pay and conditions for the creative workforce that is still reeling from the impact of the pandemic.”

Other key decisions announced today include:

The £1 million per hour expenditure credit threshold for high end TV will remain unchanged.

The minimum slot length for high end TV will be reduced to 20 minutes, and applied on an episode-by-episode basis.

A definition of a documentary will be put into legislation and will be based on guidance currently used by the BFI. Final wording and exclusions to the definition will be published as part of draft legislation in Summer 2023 for comment.

Qualifying expenditure for the video games expenditure credit will be expenditure on goods and services that are used or consumed in the UK.

The expenditure credits will be available to claim from 1 January 2024. However, to give companies time to adjust there will be a transition period. Film and TV programmes that have not concluded principle photography, and video games in development, on 1 April 2025 may continue to claim the existing tax reliefs until 31 March 2027.

You can read the full government response to the consultation on audio visual tax relief here.




Pippa Considine

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