Time to go to the movies
With tax incentives helping to boost the UK film industry, is now the time to make the move into a lead role in one of the UK’s success stories? asks CASSL chair William Hughes.
For this July’s ACA case study exam, ICAEW selected to explore the UK film industry which has been growing over the past 10 years with film production spend up 12% in 2017 to £1.9bn. Large franchises like Harry Potter, James Bond and the Star Wars reboots are all based in the UK and have contributed to this growth. But what has caused this growth? Could it be Hollywood’s fascination with British villains?
Or is it the result of tax legislation?
The Film Taxation Relief (FTR) was introduced in 2007 and has been kept on by subsequent governments, with reforms, due to its clear success in improving the industry in the UK. The key highlights of the FTR where principal photography begins after 1 April 2015 are:
- Corporation tax deduction of up to 100% of the enhanceable expenditure incurred.
- Where a loss arises and is surrendered, 25% cash rebates of core production expenditure. Core expenditure includes expenditure on pre-production, principal photography and post-production but excludes any expenditure incurred on development, distribution or other non-production activities
- Only available to qualifying films and UK production companies under the scope of corporation tax.
- Qualifying films must have passed a cultural test or be co-produced in the UK.
- It’s not just for films! The FTR is part of a much wider creative industry tax relief scheme which is looking to grow theatre, TV, art, music and even video games in the UK.
While the strong skillset of UK production companies and actors will also play its part in the growth, with films like the recent Star Wars Solo film having a budget of $275m, it’s clear to see the financial incentive of domiciling in the UK.
The entire UK film industry is reported to now be worth £4.3bn, employing 66,000 people. With continued growth we may find new opportunities arising in this sector. Whether this is simply an increase in tax advice on FTR or staff departments expanding as they grow, the UK will inevitably benefit from the sector's expansion.
William Hughes is chair of CASSL, London’s student accountants society.
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