CEO of Artem special effects, Mike Kelt says that although the TV tax credit is good news, it could be better
The advent of the new TV tax credit will bring a great sense of relief and hope to the UK facilities sector.
For too long I have watched productions going elsewhere to film to benefit from local tax reliefs in other countries. Even the BBC, which we all fund, often takes its drama abroad, such as the long running Robin Hood series, and invests in foreign counties rather than using UK expertise.
So it is clear that everyone will be in favour of the new opportunities that are expected to open up, the increase in workload that should materialise, the much needed return on investment that we all make to keep equipment up to date, and the increase in employment that will inevitably result.
But has an opportunity also been lost? Could more have been achieved? The new TV tax credit is based squarely on the film tax credit which has been with us now for a few years, and which everyone is fairly familiar with. But it is not perfect, and whereas it is understandable to stick to the things you know, it is even better to build on them.
The TV tax credit will still have an upper limit of 80% qualifying spend. In other words a maximum of 80% of the budget will qualify for relief. This therefore drives the production to spend the remaining 20% elsewhere, and not in the UK. Where is the sense in that? The answer often given is that it would not be allowable by the EU – but this is not necessarily the case and rather a ‘gold plating’ by UK government. At the other end of the spectrum there is a 25% core expenditure floor, thought to exist to stop frivolous claims. Translated this means a production has to spend 25% of its budget in the UK before it can qualify at all, and this can prevent work coming to the UK that would otherwise have done so. For instance, where a production shoots abroad, (any qualifying production, not necessarily a UK one), it could do its post production, editing or sound in the UK – but there are almost no productions where this would account for 25% of the budget, so it stays away. Doh! Why not at least reduce this floor to 10% and significantly increase the projects finished in the UK?
I look forward to the new reliefs. But please, next time, push the boat out a tad further, while in the meantime contemplating the loss of potential tax income from personal and business tax, and VAT!
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