Update on UK Film and TV Tax Relief Consultation

In November 2022 the UK Treasury Department announced proposed changes to the UK audiovisual tax reliefs which are designed to modernise the existing support and make it easier for producers to finance their productions.

Alongside world-class infrastructure and talented cast and crew, the UK’s generous tax reliefs are one of the driving reasons behind the nation’s current boom in production. According to the government, £972m in support was provided to the film, TV, and gaming industry in 2021-22 alone. And this support is paying off, with producers spending a record-breaking £6.3b ($7.7b) on film and big-budget HETV productions in 2022 (92% of which can be attributed to inward investment from major international productions).

To build on this success, the government is planning to modernise the existing reliefs and ensure that they remain globally attractive while continuing to best serve the needs of the industry.

What changes are proposed?

Merger of existing tax reliefs

For the film and TV industry, the major change proposed in the consultation is the merger of the film, animation, high-end TV, and children’s TV tax reliefs into a single tax credit.

This is because the production process for high-end TV and film is becoming increasingly similar in terms of financing and scale. There is also significant overlap between the eligibility requirements for each of these tax reliefs.

Under the proposal, all production activity would count as qualifying costs for the tax credit. There would be no changes to the existing criteria which companies must meet to access the tax reliefs.

Increase of minimum expenditure threshold for HETV relief

Globally, the TV landscape has changed dramatically since 2013 when the current HETV tax relief was introduced. The rise of streamers and viewers’ insatiable appetite for content have seen production budgets climb exponentially.

In turn, many HETV productions now exceed the current £1m minimum expenditure threshold and qualify for the HETV tax relief, despite being backed by big budgets. The government is thereby looking to increase this minimum expenditure threshold to ensure relief is reserved for those productions which wouldn’t get off the ground without it.

Clarification of minimum slot length

One area of the current scheme which has caused confusion is the minimum slot length for qualifying HETV programmes. Currently, the legislation states that programmes must have a minimum slot length of 30 minutes.

This was intended to apply on a per-episode basis (i.e., each episode of a series must be at least 30 minutes long) but due to the way the legislation is worded, multiple shorter episodes are often grouped together to qualify for the relief.

To avoid this, the government is considering amending the legislation to specify that it applies on a per programme basis (and reducing the minimum slot to 20 minutes) or removing the slot length requirement altogether.

Reform of AV tax reliefs to expenditure credits

The GloBE rules, which ensure foreign income is taxed at an effective rate, treat various tax credits differently. It has been a matter of debate as to whether the film and TV tax reliefs qualify as income for GloBE purposes, which may be deterring investment.

To clarify the matter, the government is considering reforming the reliefs into refundable expenditure credits. This will provide producers with greater clarity as to the amount of credit they’ll receive. It is also expected to encourage further inward investment, as refundable credits are treated as income.

Removal of 80% cap on qualifying expenditure

The government is also considering removing the 80% cap on qualifying expenditure to encourage productions to keep more portable aspects of production (e.g., visual effects) in the UK.

Other changes

Finally, the government is considering a number of technical changes to improve the claims process, including mandating user-friendly digital forms.

What happens now?

The consultation on the proposed changes ended on February 9, 2023. The government will now analyse the feedback and use this to shape its final proposal.

Any reforms to the tax reliefs are expected to be implemented in Spring 2024; the government will confirm the exact timing once it has reviewed the results of the consultation.

How EP can help

As the UK incentives landscape continues to evolve, the EP team wants to make sure you understand how it impacts your production. Keep an eye on our site for updates and if you ever have questions or need support, please don’t hesitate to reach out to us.

If you decide to explore the UK as a filming destination, give EP's tax incentive team a call. Our experts know production incentives and funding options inside and out. We'll help you to optimize your budget by securing the most lucrative financing opportunities for your next UK-based project. As a starting point, check out our incentives map to learn what funding opportunities and tax benefits are available to you.

Once you've decided on a location, EP's Production Portal will help you to streamline and simplify your reporting. Track regionality across your productions to instantly see how much you're spending on crew and use that data to support your tax reporting! And rest assured, EP will help you through the entire process – from greenlight to wrap.