Under current rules a film production company can surrender losses of up to 80% of qualifying core expenditure for a cash tax credit of 25% (for limited budget films) or 20% (for all other films).
Subject to State aid approval, from April 2014 the rate of film tax credit for all film production companies will be 25% on the first £20 million of qualifying core expenditure (subject to a maximum of 80% of qualifying core expenditure) and 20% thereafter (to a maximum of 80% qualifying core expenditure).
Other changes to film tax relief are:
- The minimum UK expenditure qualification will change from 25% to 10%;
- The UK cultural test will be modernised;
- The government will seek state aid clearance to increase the rate of relief to 25% for all qualifying expenditure in 2015.
These changes will enhance the attractiveness of film tax relief, and will also bring more films within the scheme as only 10% of core production expenditure will have to be spent in the UK.
For more information or to discuss the proposed changes contact the TaxDesk on 0845 4900 509 and ask for Paul Howard.