Chancellor’s film relief rules broadly welcomed

Chancellor Gordon Brown’s decision to offset the closing of a tax loophole widely used by filmmakers with extended tax relief has been generally well received by industry bodies.

The new relief will typically provide filmmakers with 20 per cent of their production budget, compared with the 15 per cent they usually receive under the existing Section 48 relief, due to expire on July 1 2005. Additionally, the new tax credit will not be time limited.

The Chancellor also indicated that the Government would look at ways to improve the proportion of British films produced being distributed, described by the Chairman of the UK Film Council, Sir Alan Parker, as "a significant step forward in tackling the key issue facing the UK film industry."

Speaking after the Chancellor's announcement Sir Alan, said: "The UK film industry makes a major contribution to our economic and cultural life, and the announcement of the new tax credit to support future UK film production will provide much needed certainty for the future with the benefit going direct to filmmakers.

"Limited distribution has traditionally prevented many people in the UK and abroad from seeing new UK films.

"Extending the scope of the new tax credit to distribution would provide a major boost to the UK film industry, helping to ensure that many more people get the chance to see British films both at home and abroad, and we look forward to discussing with Government how we can make that happen."

The Chief Executive of Pact, John McVay, also applauded the Chancellor’s budget. He said: "We welcome the Chancellor's continued support of the UK film industry. No British government has ever introduced a tax relief for the sector without an expiry date attached. It will bring much need stability into the business."

Ronnie Planalp, director of film at Pact, added: "With the expiration date of Section 48 looming, this has been an uncertain time for British feature film producers. The concept of a 20% relief that solely benefits the producer is great news. We look forward to working with government over the forthcoming months to refine the detail of the mechanism."

The response wasn’t all positive, however, with business consultancy PricewaterhouseCoopers maintaining that the changes on tax relief for expenditure in films may have gone too far.

Derek Jenkins, a partner a PricewaterhouseCoopers, said: "Many filmmakers will be unable to realise any value from the Government’s new beneficiary of tax relief. The British film industry, especially smaller independent production companies, will therefore find themselves in the poor state predicted when the original announcement was made some weeks ago."

(GB)