The Chancellor's plans to give additional tax breaks to film producers who make films in the UK have recently received EU state aid approval.
As of 1 April 2015, the rate of Film Tax Relief available for UK tax resident Film Production Companies, has increased to 25% for all qualifying core expenditure on eligible film productions.
Previously, Film Tax Relief applied to eligible film productions at a rate of 25% for the first £20 million of qualifying core expenditure, and 20% thereafter, up to a maximum of 80% of the total film budget. The removal of the 20% rate of relief is intended to attract the 'big ticket' films, such as Gravity and Avatar, to the UK by increasing the value of the tax break applicable to their total budget. In order to benefit from the relief, a minimum of 10% of the total production costs must be spent on expenditure incurred on filming activities (pre-production, principal photography and post production) which take place within the UK.
Budgets for these large films can reach well over £100 million, and with no cap on the amount that can be claimed, the tax incentive can be significant. According to the Treasury, the film tax breaks have already funded £8 billion of production costs, with 222 films having received such support in 2014.