UK Screen Alliance welcomes the announcements in today’s Autumn Statement by Jeremy Hunt, the Chancellor of the Exchequer, to provide additional tax relief for expenditure on visual effects, to boost the international competitiveness of the UK’s incentive. The Treasury has issued a call for evidence to inform the development of detailed proposals.
The Chancellor says in the foreword to the consultation document published today,
“I can confirm that we will provide more additional tax relief for expenditure on visual effects, to boost the international competitiveness of the UK’s offer. This call for evidence takes the first, crucial step towards this, as it will provide the Government with the depth of understanding it needs to develop targeted proposals that best serve the needs of the visual effects industry.”
The UK Screen Alliance has long campaigned for reform to the UK’s screen sector tax credits, as the way they are structured disadvantages VFX. The UK has world-class award-winning talent in this sector, but investment in the UK has stagnated, while other territories have increased the attractiveness of their incentive programmes.
When the UK’s screen sector tax reliefs were designed in 2007, the UK was bound by an EU restriction, which stipulated that tax relief should have a territorial cap. Productions receive 25% relief on their UK production expenditure, but once that spend exceeds 80% of their global production budget, there is no further relief in the UK. The unintended consequence of this is that VFX work, which is not tied to where filming takes place, and is therefore the most ‘portable’ part of the budget, can easily be moved outside of the UK to a jurisdiction that will make tax relief available. An analysis of UK production between 2017 and 2019, reveals that £1bn of VFX expenditure on projects qualifying for UK Tax relief was carried out overseas – this is approximately half of all VFX work carried out on UK-qualified productions in that time period.
Neil Hatton, CEO of UK Screen Alliance said,
“Very often clients will say, ‘We love your creativity, your innovation and reliability to deliver. We love your people and we love working in the UK, but your VFX incentive doesn’t meet what is available elsewhere in the world.’ Either that or, ‘We are capped-out’. This consultation and the promise of a more competitive incentive, announced today should aim to position the UK as the first choice destination for VFX production for international film and TV. We are focussed on capturing a larger market share as global demand for VFX recovers, following the US actors’ strike, and we aim to play a full part in growing the UK’s Creative Industries towards the Government’s 2030 targets.”
The Government’s stated aim is to grow the Creative Industries by a further £50 billion in GVA adding one million new jobs by 2030.