Last week, the British government unveiled a smashing 40% tax credit for UK film productions budgeted up to £15 million (approx. €17.63 million). The brand-new corporate tax relief, set to run until 2034, was announced by Chancellor of the Exchequer Jeremy Hunt on Wednesday 6 March.

The governmental plan also includes a 5% increase in credit for visual effects in film and high-end TV, along with the removal of the 80% cap.

Hunt commented: “We have become Europe’s largest film and TV production centre, with Idris Elba, Keira Knightley and Orlando Bloom all filming their latest productions here. Studio space in the U.K. has doubled in the last three years, and at the current rate of expansion, next year we will be second only to Hollywood globally.” He disclosed that the decision was made in response to the requests made by company reps from the likes of Pinewood, Warner Bros. and Sky Studios.

According to a British Film Institute (BFI) press release, the move was welcomed by “over 100 industry heavyweights” including Mike Leigh, Andrew Haigh, Barbara Broccoli, Kenneth Branagh, Daniel Kaluuya, Danny Boyle, Riz Ahmed, Sam Mendes, Steve McQueen, Alex Garland, Alfonso Cuarón, Andrea Arnold, Asif Kapadia, Emerald Fennell, Gareth Edwards, Joanna Hogg, Richard Curtis, Ridley Scott and David Puttnam.

The uplift is aimed at “UK films with a budget up to £15 million range (with either a UK writer, or UK director, or certified as an official UK co-production).” Films that meet the criteria will be able to claim an increased Audio-Visual Expenditure Credit (AVEC) at 53% (up from 34%) from 1 April 2024. The aforementioned AVEC replaces the Film Tax Relief rate which provided 25% of qualifying UK expenditure on up to 80% of a film’s total production budget. The AVEC at 53% equates to a relief rate of approximately 40% under the Film Tax Relief.

The figures published by the BFI show that “investment in film and high-end television production in the UK has grown significantly in recent years, and last year accounted for 78% of the total £4.23 billion [approx. €4.97 billion] spent on making new productions in the UK. However, getting UK films into production budgeted under £15 million has become increasingly challenging.” Last year, the BFI reports, “the spend on making UK domestic films dropped to £150 million [approx. €176.2 million], just over 11% of the total £1.36 billion [approx. €1.6 billion] spent on making new films in the UK; this downturn followed an even sharper 31% decrease in spend on the previous year.” 

“Within a highly competitive global market for film production, where countries worldwide are offering increased tax incentives, UK films are having to consider going overseas if they are to be made. As a consequence, this would limit opportunities across the UK for crews, production services and locations at a time when the sector is seeing significant investment in state-of-the-art production facilities,” the BFI further explains.

Commenting on the provision, BFI chair Jay Hunt said: “The Government’s new tax credit is a game changer for U.K. filmmakers, creating jobs and ensuring great British stories continue to be told. By introducing the uplifted rate, the Prime Minister and the Chancellor are fuelling the growth of the wider screen sector that contributes billions to the U.K. economy.”

Finally, BFI chief executive Ben Roberts added: “This is a dramatic moment for UK film, and the most significant policy intervention since the 1990s. The positive impact will be felt across our industry, and through all the new films that audiences will get to enjoy. The films we make are vital to our culture expression and creativity — they reflect a diverse and global Britain, and build careers — and we’re grateful to Government, the DCMS, the industry and our friends at Pact for working together to realise this historic initiative.”