The measure

The Chancellor announced the following changes to the UK film tax relief:

  • An increase in the rate of relief from 20% to 25% for the first £20 million of qualifying expenditure on large budget films;
  • A reduction in the minimum UK expenditure requirement from 25% to 10%; and
  • Modernisation of the cultural tests.

The changes will apply from 1 April 2014, subject to State Aid approval from the European Commission.

The current rate of relief is 25% for limited budget films (those with total core expenditure of £20 million or less) and 20% for all other films. Following the changes, film production companies will be able to claim an additional payable tax credit of up to £1 million for each large budget film.

The Government also announced that it will seek state aid clearance to increase the rate to 25% for all qualifying expenditure when the film tax relief is next reviewed by the European Commission in 2015.

The Chancellor announced his intention to provide further support to the British creative sectors by consulting in early 2014 on the introduction of a limited tax relief for commercial theatre productions and a targeted tax relief for theatres investing in new works or touring productions. The Government will also invest £5 million in the National Film and Television School's Digital Village to expand and upgrade its existing training centre facility to provide a sustainable supply of UK talent for the digital and creative industries.

Who will be affected?

Film production companies.


1 April 2014.

Our view

The changes announced today significantly improve the UK film tax relief, which has provided around £1bn in support for British films since its introduction in 2007. Together with the tax reliefs for animation and high-end television that were introduced in April 2013, these changes will help create a sustainable British creative sector and will be particularly welcomed by the UK visual effects industry and large budget film producers.

The announcements follow a consultation on support for the visual effects industry earlier this year and are more generous than originally proposed. The reduction in the minimum expenditure requirement, in particular, will encourage large budget films to bring qualifying visual effects work to the UK. No detail on the modernisation of the cultural tests has been published, but it is likely that the changes will bring the film tax relief tests in line with the cultural tests in the high end television and animation tax reliefs that were introduced in April 2013.

Research and insight

Major changes in UK tax Major changes in tax
The latest briefing paper on two major tax issues: international tax reform in the shape of BEPS, and transparency
European Tax Survey European Tax Survey
The findings of Deloitte's survey of tax professionals from almost 1,000 companies across Europe
Patent Box Patent Box
Think inside the box
UK GAAP The future of UK GAAP
What's changing?
Employment status Employment status
The challenges of engaging freelancers and temporary workers
Environmental Taxes Guide Environmental Taxes Guide
A starting point to map a business' environmental tax footprint
Sustainable tax strategy Sustainable tax strategy
Practical guide to help companies