Government extends tax breaks for UK films

Clash Of The Titans is one film to have benefited from tax relief while filming in the UK

Films made in the UK will continue to receive tax breaks, worth around £95m a year, the government has announced.

Eligible films must be released in the UK, with 25% of their production costs spent in the country.

Industry estimates say the system makes the UK up to 40% cheaper for film-makers than the US, and accounts for £1.4bn of GDP.

Prime Minister David Cameron said the scheme would be extended "to the end of 2015".

Greg Dyke, head of the British Film Insitute, said the announcement would be "greatly welcomed across the film industry", adding it would "give confidence, particularly amongst independent filmmakers, at a time when access to finance is increasingly difficult."

Recent films to benefit from tax relief range from dramas like Brighton Rock to sci-fi thriller Attack The Bloc, and blockbusters such as the Harry Potter series.

The latest James Bond film, Skyfall, also qualified for the scheme and began shooting last week.

Productions with a budget of £20 million or less can apply for a 25% rebate on any expenditure deemed eligible for tax relief.

This normally includes pre-production, principal photography and post production - but not development or distribution of the film.

Movies with a budget of more than £20 million can claim a rebate of 20%.

'Sustainable industry'

A report commissioned by the UK Film Council in 2009 warned that Britain's film industry could collapse if the benefits were removed.

It added that the film industry was worth more than £4.5 billion a year to the nation's gross domestic product and £1.2 billion to the exchequer.

Films are also important in terms of jobs, directly employing around 36,000 people, with the same number supported indirectly.

"The huge success of British films at the Oscars, the Golden Globes and the Baftas this year is clear recognition of our world class talent and creativity," said culture minister Ed Vaizey in a statement.

"But as a vital creative industry, it also has huge potential for economic growth. Film tax relief is at the heart of our drive to support the production of culturally British Films within a sustainable and vibrant industry.

"I'm delighted that we can give certainty to the industry for the next four years."

The film industry was generally receptive to the government's announcement.

Lord Grade of Yarmouth, chairman of Pinewood and Shepperton studios said: "This decision will deliver certainty for the UK's talented film-makers and will provide the platform for growth, investment and jobs in a growing segment of the economy."

British Film Commission chairman Iain Smith added: "Not only does it demonstrate the Government understands the vital role that the art and business of film-making plays in our economic and cultural landscape, but it also ensures the UK can maintain its global competitiveness".

Meanwhile, media lawyers Reed Smith, whose practice dates back to the silent movie era, said the tax credit had "become an indispensable part" of the film industry.

"The only shame is that the tax relief extension wasn't confirmed beyond 2015."