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EU approves film tax relief
The European Commission has given State Aid
approval to the new film tax relief on the basis
of some changes being made to the cultural
test.
The new tax credit strongly encourages UKbased
producers to work within the UK and to
focus on aspects of British culture. It can help
to sustain a dynamic and recognisable British
film industry and works to encourage inward
investment in the UK.
In terms of benefit to Scotland, the new tax
credit will help Scottish Screen continue to
support indigenous talent and production, as
well as to encourage productions to shoot in
Scotland. The new UK points system works in
the same way as Scottish Screen’s, which means
that productions supported by Scottish Screen
should also be able to access the tax credit,
further promoting Scotland as a place to make
films.
The main highlights of the new tax relief
will mean
• For films that cost up to £20 million, the Film
Production Company (FPC) will be able to
claim an enhanced deduction of 100% with
a payable cash element of 25% of UK
qualifying film production expenditure.
• For films that cost over £20 million, the FPC
will be able to claim an enhanced deduction
of 80% with a payable cash element of 20%
of UK qualifying film production expenditure.
• The minimum UK spend threshold for
qualifying films will be set at 25%.
Revised Cultural Test
The revised cultural test will come into force
once approved by the House of Commons
and House of Lords. The proposed date of its
implementation is 1 January 2007.
The changes from the previously published
cultural test are:
• The Cultural Content section has been
increased from 4 to 16 points.
• The Cultural Hubs section has been reduced
from 15 to 3 points.
• The Cultural Practitioners section has been
reduced from 13 to 8 points.
• A new section has been added, Cultural
Contribution, to which 4 points have been
allocated.
• The total number of points available is
reduced to 31 but the required pass mark of
16 remains unchanged, subject to a ‘golden
points’ rule as follows:
A film scoring all 15 of the points available in
sections C, D and A4, and less than two points
in section A1 and less than two points in section
A2, must additionally obtain the points in
section A3 to pass the cultural test.
If a film scores two points in section A1 or
two points in section A2, it will not require the
additional points from section A3 in order to
pass the test.
Guidance on how the test
will work.
The Department of Culture Media and Sport
(DCMS) revised guidance on the cultural test
is available in full from their website at www.
culture.gov.uk.
The DCMS has set up a special e-mail address
to capture queries. Please e-mail culturaltest@
culture.gsi.gov.uk with your enquiries.
Transitional Arrangements
The HM Treasury has published details of the
transitional arrangements which are available
from their website www.hmrc.gov.uk.
Competition Commissioner Neelie Kroes
commented: “The Commission is satisfied
that the revised UK film tax incentive scheme
complies with the conditions set out in its
Audiovisual Communication. As with other film
support schemes which meet these conditions,
we have been able to apply the cultural
derogation to the general ban on State aid in
the Treaty. We welcome the guidance published
by the UK authorities which confirms that
European co-productions can benefit from the
scheme.”
Ken Hay of Scottish Screen welcomed EU
approval and said:
“This will at long last provide certainty for the
whole of the industry about both how the tax
credit will operate and from when.
“The only aspect of the new system which we
would like to consider further is how it will
affect minority co-productions. We believe
strongly in supporting Scottish producers to
form relationships with fellow producers and
production companies around the world. The
proposed points system may make it difficult
for Scottish companies to receive support for
minority co-productions. Often a significant
portion of ‘stories’ being made as international
co-productions, while relevant to the British
public, may not reflect significantly on an aspect
of British culture.
“There is still work to be done in clarifying some
of the definitions in the new guidelines, and
we will work with our partners in the UK Film
Council, DCMS and PACT to ensure that this is
done as promptly as possible.”
New Funding for Education Projects
Scottish Screen has
launched a new
funding strand for
education initiatives.
The fund has been
set up to promote
the development
of moving image
education and
moving image media
literacy, both in
formal and informal
educational
contexts.
Scottish Screen is currently piloting
the Moving Image Education
project in a cluster of six primary
schools in Brechin, in partnership
with the Scottish Executive and
Angus Digital Media Centre. The
pilot demonstrates the potential
of moving image education, not
just as a critical literacy in the 21st
century, but also as a new way of
teaching across the curriculum.
Scottish Screen wants to see
moving image education developed
further, and more widely and
sustainably deployed.
Applicants must be either a Scottish
local authority, an organisation
with a national remit for education
in Scotland, or a Scottish
organisation with a regional remit
for education seeking to develop
models of moving image education
of potentially national significance
and applicability.
The type of programmes eligible
for funding include: professional
development for schools
professionals; development of
moving image education training
programmes, skills, courses and
resources within local authorities
or teacher education institutions;
or professional development for
education professionals outwith
schools.
The fund is for £80,000 per annum
for 2007/8 and 2008/9. The first
call for applications will close on
6 February for consideration at an
Investment Meeting on 6 March
2007.
For more information about
moving image education and the
funding opportunities available,
please visit the Scottish Screen
website (www.scottishscreen/
education or www.scottishscreen/
funding).
www.scottishscreen.com