Brown proposes new tax rebate rates for film makers |
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Thu, 23 Mar 2006 08:15
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LONDON: The British government relaxed rules pertaining to tax breaks for companies making movies in the country. The 2006 budget, presented Wednesday, provides for a new tax credit for production houses spending a minimum of 25 per cent of a film's budget in the U.K.
Under the rules, which will become applicable from April, movies with production budgets of up to 20 million pounds in the U.K. are entitled to a tax credit of 20 per cent. For higher budgets, the tax credit level will be 16 per cent.
Chancellor Gordon Brown had proposed a 40 per cent threshold level in his pre-budget report, but he has now brought this down to 25 per cent.
The proposal has been welcomed by the British Film Council, which said it provides the certainty the industry needs to operate and will help the U.K. consolidate its position as the most important film industry in the world after the U.S. This will give Hollywood a bigger incentive to make movies in Britain, said the council.
As per the new rules, British movie makers will no longer be able to claim tax relief on money spent overseas. The government justifies this decision saying it is essential to bring the U.K. in line with European Union law.
A treasury spokesperson claimed the new reliefs are a well-targeted replacement for the old system of reliefs.
"They continue to deliver very generous levels of support but are now targeted directly at film-makers, therefore providing better value for money for UK taxpayers and at the same time guaranteeing the sustainable production of culturally British films," he said.
The government changed the earlier system of film tax relief as it found that investors were abusing it.
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