Friday 7 November 2014

Big budget movies in the UK: good news for tax payers

Not much core expenditure
here, one suspects 
Late last month, on 29 October to be precise, the Finance Act 2014, Section 32 (Film Tax Relief) (Appointed Day) Order 2014 (SI 2014/ 2880) was made. This unattractively-titled provision at least had some attractive content: its effect is to increase the amount of relief available for films if they have incurred a core expenditure exceeding £20 million from 1 April 2014. Core expenditure does not mean expenditure on the naughty bits of the film that seem to be mandatory these days and which make the audience go "Cor!" when they view them.

 According to the Order's Explanatory Note:
This Order appoints 1st April 2014 as the day specified for the purposes of section 32(4) of the Finance Act 2014. Authority for this retrospective effect is given by section 32(6) of that Act. The amendments made by section 32 to the Finance Act 2014 ensure that film tax relief will be available for surrenderable losses at a rate of 25 per cent up to the first £20 million of each production’s UK core production expenditure (to a maximum of 80 per cent of UK core production expenditure) and 20 per cent thereafter (to a maximum of 80 per cent of the UK core production expenditure), for all film productions where the principal photography was not completed before the appointed day – 1st April 2014. Previously the rate of 25 per cent only applied to limited budget films i.e. those with UK core production expenditure up to £20 million.

The minimum UK spending requirement will also change from 25 per cent to 10 per cent for film productions where the principal photography was not completed before 1st April 2014.

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