The High End TV Tax Relief
What is the TV Tax Credit and how will affect the UK industry?
Article posted in March 2013
What is the TV Tax Credit?
High end TV, particularly drama productions will be able to get tax relief from the UK government if their budget exceeds £1m per hour of TV. This means that for every £1m per hour that a production spends in Britain, they will be able to claim for a cash relief of 25%. If everything goes as planned, the relief will begin from April 2013, the start of the new Tax year.
This should arrest the exodus of UK productions from shooting overseas (Birdsong, Titanic) and give overseas production companies a strong incentive to shoot in the UK. Having seen the sucess of the Film Tax Credit, the government wants to encourage inward investment into TV.
The Treasury are also providing similar Tax Breaks for Animation and the Games industry.
The Film Tax Credit has been very successful in creating jobs and inward invesment and set the template for the TV Drama, Games and Animation relief.... more on the Film Tax Credit below.
What's the Story?
Following the sucess of the Film Tax Credit, Pact and several production companies lobbied the DCMS for a similar tax break for high end TV and animation.
In the chancellor of the exchequer's 2012 budget, he annonunced the intention for the TV tax credit. This prompted a period of consultation.
Since late summer/autumn 2012, the DCMS and Treasury Department have been in consultation with key industry figures to work out how the relief will work in action, who might be eligible and several more key details.
The Treasury established a group of industry experts to help focus the policy during the period of wider consultation. Members of the TV group were:
- John McVay, PACT
- Helen Flint, Company Pictures (Owned by All3Media)
- Jay Roewe, HBO
- Daniel Isaacs, Kudos Productions (Owned by Shine/News Corp)
- Mary-Ann Hughes, The Walt Disney Company
- Richard Williams, Northern Ireland Screen
- Nigel Stafford Clark, Deep Indigo Productions
- Sheryl Trinh, Impossible Pictures
That group delivered their findings and the Government are due to give their response to the consultation before Christmas (expected on the 11th December). Their response will also contain additional information about how the relief will work in action.
How much will someone using the Tax Credit get?
The minimum investment will be £1m per hour of drama. If a production passes the cultural test, they will be able to claim 25% of that back as a cash payment from the HMRC, provided they spend that money on ‘core production’ costs (the essential costs of making a programme, not including marketing).
With the new Tax Relief, many UK production companies will be able to budget for more because they will be able to claim more back.
With more money available to spend on screen, this *should* mean that production companies who claim the relief, will be able to pay crew proper rates and reduce the ridiculous working schedules.
In an ideal world, we hope this will see an end to 6 day weeks and continuous working days for crew, we fear it will disappear in above the line costs...
Who is eligible for the Tax Relief?
In order to qualify for the Tax Relief, a production must meet two sets of criteria: The first is that the budget is at least £1m per hour.The second is the the cultural test. The DCMS are in charge of creating the cultural test (ensuring it is a British project) and if a production passes both of these tests, it will be eligible for relief.
What is the Cultural Test?
The cultural test determines whether a production can be called ‘British’ or not.
As an example, the Film Tax Credit is awarded on a points basis. The DCMS award points if you can prove your production meets a certain criteria. So, you get 4 points if the film is set is in the UK, 4 points if it’s in the English language, 2 Points if you use UK locations and/or Visual Effects companies, 1 Point for director, 1 for producer, 1 for crew and so on..... There is a maximum 31 points available on the chart. If your production qualifies for at least 16 points out of 31, the film is deemed pass the Cultural Test. You can see the full chart here
The points system has enabled many overseas producers to film in the UK. Disney’s John Carter was originally set to film in the US. When the producers realised they could qualify for the Film Tax Credit, they came to the UK. The estimated budget of John Carter was $250m (although some believe much more) and the majority of it was spent in Britain, using British locations, companies and crew. That money then filters back into the economy while the industry advances in talent development and skills.
So who will be coming here?
We asked the DCMS and the Treasury which companies had been consulted about the TV tax credit, they told us that more would be revealed in the Governments response to the consultation. While UK and US producers have already been involved with the consultation process, there is no mention of other regions or national broadcasters being involved.
What is known is that Film London have presented the capital to many overseas broadcasters and production companies in familiarisation trips (known as Fam Trips). Key individuals from abroad are invited to a tour of London and all it has to offer, the last of these Fam Trips was during the Olympics, the creation of the tax credit should trigger more...
So who is likely to be coming here?
As with John Carter, Disney have already brought several productions to the UK – They also own US network ABC. Warner Brothers have already set up shop in Leavesden Studios. HBO are currently filming Game of Thrones 3 in Belfast. Starz are already shooting Da Vinci’s Demons in Swansea. NBC Universal already own Carnival Films who make Downton Abbey. This list hasn’t even included CBS and Fox and any number of US production companies and broadcasters.
Glenn Whitehead of HBO commented: “A high-end TV tax incentive in the UK is a potentially transformative initiative.” James Penny of the UK’s Mammoth Screen added “A new tax incentive for bigger-budget TV projects would be good news indeed for our business and for the TV industry generally. More of our projects would be produced in the UK and we’d spend less time juggling the pros and cons of filming elsewhere” (Source: RSM Tenon, August 2012)
As well as the tax incentive, filming the in UK has other appealing features. The skilled workforce, studios and the post production facilities include many leading companies that are recognised around the world.
Shooting in the UK now offers a financial incentive to join the skilled crew and infrastructure.
How much will they spend?
Good question. The accountants RSM Tenon estimated that an additional £350m per year will be spent on UK production, the UK economy would benefit from a return of around £1bn per year. This figure includes both UK and overseas producers.
To put that increase into perspective, the whole of the BBC One drama budget in 2011 was around £200m.
Until we start to see how many projects come here and how the workforce and infrastructure copes, £350 is an estimate.
Looking across at the Film Tax Credit which was introduced in 2007, a pattern of growth emerged. After a slow start in 2008, inward investment has risen from £432 in 2008 to just over a £1bn by 2012.
There has been in increase in the film workforce too. The BFI statistical yearbook shows that in 2008, there were 23,000 people working in Film and Video production. By 2011, there had been an increase to 39,000 people working in Film and Video production.
John McVay of Pact was a key cog in the consulation process, he commented “The government has acknowledged the importance of the creative industries, and especially the multi-billion pound contribution made by independent TV sector to our economy, This is a year-on-year growth sector that is renowned for its world-leading creativity. UK television export figures have never been better and this extra investment for entry-level and professional trainees will be welcomed by many companies.”
How do I apply?
The government will announce more details in their response to the consultation before Christmas. That response will include more information on how to claim the relief.
So what does this mean to the Drama industry?
In a nutshell, more jobs, more money on production and hopefully, high quality productions being made by high quality UK crew. Skills will advance and a larger workforce can be sustained. The TV tax credit will benefit the industry, the economy and the viewer. 2013 could prove to be a very exciting year.....
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