British film and TV producers can breathe a sigh of relief after months of uncertainty around the country’s tax relief scheme for production.
As part of the U.K.’s spring budget, Chancellor of the Exchequer Jeremy Hunt revealed on Wednesday that he’s raising tax credits and keeping the qualifying threshold in place. This is a welcome move for the TV production community, in particular, which has for years taken advantage of a lucrative scheme in which scripted TV shows with a minimum spend of £1 million ($1.2 million) per broadcast hour are able to claim payable cash rebates of up to 25% on qualifying U.K. spend.
The tax breaks have helped to elevate the U.K. into a major hub for international productions, yet the scheme has been under review since the fall, causing some anxiety in the production community.
Hunt confirmed on Wednesday, however, that both film and high-end TV will be eligible for a credit rate of 34% — up from the previous 25% — and that the qualifying threshold for high-end TV will remain at £1 million. Full details of the updates will be published this summer, while the changes are expected to go into effect from January 2024.
Notably, the government is also reducing the the minimum slot length required for a high-end TV production to be eligible for the Audio-Visual Expenditure Credit from 30 minutes to 20 minutes. The new legislation will apply to every individual episode, and will take effect from Jan. 1, 2024.
Elsewhere, animation and children’s TV will be eligible for a rate of 39% — which is even higher than the one in place for film and high-end TV — while a new Video Games Expenditure Credit will have a credit rate of 34%.
As part of the budget, the film, TV and video games tax reliefs will be reformed from April 1, 2024, becoming expenditure credits instead of additional deductions. “The new Audio-Visual Expenditure Credit will replace the current film, high-end TV, animation and children’s TV tax reliefs,” reads a line from the budget.
As part of this change, expenditure credits will be calculated directly from qualifying expenditure instead of being an adjustment to the company’s taxable profit.
Outlines the budget: “The expenditure credits will be available for companies to claim in respect of accounting periods ending on or after 1 January 2024. Productions that have claimed relief under the current system will be able to opt into the new regime.”
Meanwhile, the current tax reliefs will close to new productions from April 1, 2025. Films and TV shows that haven’t finished principal photography — and video games that haven’t wrapped development — by April 1, 2025, can continue to claim relief under the current regime until March 31, 2027.