Tax reliefs fuel creative industry boom

Tax reliefs across film, high-end television, video games, animation programmes, and children’s TV are powering record levels of production in the UK, resulting in an overall economic contribution of £7.9bn in 2016, according to research commissioned by the British Film Institute (BFI) and other sector bodies

The report indicates that an estimated £632m in tax relief seeded £3.16bn in direct production spend in 2016, a 17% increase on 2015’s £2.7bn and doubling over nine years.

The resulting £7.9bn overall economic contribution included £2bn in tax revenues, while the research calculates that production spend which would not have taken place without the tax reliefs, known as additionality, was worth £4.1bn in 2016.

The research shows expenditure on feature film production in the UK has doubled in nine years since the film tax relief was introduced, from £849m in 2007 to a record £1.72bn in 2016. Since 2013, the film tax relief has supported higher-budget films such as Dunkirk and Star Wars, all made in the UK alongside independent UK films such as Paddington 2, Lady Macbeth, Their Finest and God’s Own Country.

High-end television production has also boomed since the introduction of the high-end tax relief in 2013, with expenditure more than doubling over the ensuing three years from £414.9m to £896.7m. The report is also the first to assess the impact of the video games tax relief which came into effect in 2014 and which it calculates has supported £389.9m of development expenditure in 2016, up from £228.8m in 2015.

The analysis suggests that over four years the tax reliefs have driven a 63% growth in production spend and a 62% increase in employment across film, high-end television and animation television programmes. The overall tax revenues across film, high-end TV and animation television programmes have grown by 67% from £1.11bn in 2013 to £1.86bn in 2016.

The BFI says the tax reliefs play a crucial role supporting the UK’s competitiveness as a creative destination, attracting international inward investment production in the face of strong global competition. They have also helped lead to a repatriation of high-end TV productions which would otherwise have been made outside the UK.

Tax relief supported production is also fuelling further private sector investment with more than £850m identified spend on facilities across the UK since 2013 to service the growth in production. The BFI says its interim film production statistics for 2017 suggest growth is set to continue with a new record spend of £2bn, a 12% increase on 2016. Films which went into production in the UK recently included the blockbuster Avengers: Infinity War, Solo: A Star Wars Story, Dumbo, Mission Impossible 6, Aladdin, Yardie, Phantom Thread, The Boy Who Harnessed the Wind and Peterloo.

Philip Hammond, Chancellor of the Exchequer, said: ‘From TV shows like The Crown, to films like Darkest Hour, and animations like Peppa Pig, our creative industries are intrinsic to the rich cultural fabric of the UK.

‘But they’re also an important part of a dynamic and diversified economy, and a key component of our great, global trading nation. That is why this government is committed to supporting our highly-skilled and innovative creative industries through creative sector tax reliefs.’

The report was been produced by analysts Olsberg SPI with Nordicity, and commissioned by the BFI, working with industry partners including the British Film Commission (BFC), Pact, Pinewood Group, UK Interactive (Ukie), the UK Screen Alliance and Animation UK.

Screen Business report is here.

Accountancy Daily