The government has announced that it will be extending film relief until 2015.
Film relief is aimed at film production companies for the expenses they incur on the production of a film intended for theatrical release in commercial cinemas.
For a film to be eligible for relief, it must be certified as British, either by passing a cultural test or under an agreed co-production treaty, and must incur at least 25% of the total production expenditure in the UK.
Relief can only be claimed on production expenditure in the UK, up to a maximum of 80% of the total budget, and a higher rate of relief is available for limited-budget films (with total production expenditure of £20m or less). Companies not making a profit may be able to surrender the relief for a payable tax credit worth up to 20% of the total budget for a limited-budget film and up to 16% for other films. A higher value of support may be achieved if the relief is used to reduce company tax liabilities.
Certification of films is currently administered by the British Film Institute on behalf of the Department for Culture Media and Sport.
The extension of film tax relief follows the European Commission’s State Aid approval of the Government’s application to extend the duration of the scheme to 31 December 2015. The design of the scheme remains the same as that previously authorised.