U.K. to give film industry more tax relief

The British government took another step to lure filmmakers across the Atlantic.

Chancellor of the Exchequer George Osborne announced Wednesday that the government had approved enhancements to the United Kingdom’s film-tax-relief program, which will take effect April 1.

Among the key changes, the government said it would offer a 25% credit on the first $33 million of qualifying production expenditure, and 20% thereafter. Currently, such projects could only claim a 20% rebate.

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Additionally, companies wouldn’t have to spend as much in the country to qualify for U.K. film rebates. The government would reduce the minimum U.K. expenditure requirement -- including money spent on post-production services -- from 25% to 10%.

“The British film industry continues to demonstrate its value both in terms of job creation, international investment and creative and technical expertise, as demonstrated by British successes at this year’s Academy Awards and BAFTAs,” Iain Smith, chairman of the British Film Commission and a film and television producer, said of Wednesday’s announcement. “We are delighted by this further recognition of the value of the creative industries to the British Government.”

The changes, first proposed in December, also would make it easier for films to pass the so-called cultural test, which is used to qualify productions for incentives, and continue tax breaks to promote Britain’s already vibrant visual effects industry.

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The tax credit changes could further squeeze Southern California’s production and post-production industries, which have been hard hit by outsourcing and foreign subsidies.

Unlike California’s film tax credit, the United Kingdom does not have budget caps on film, and also allows above-the-line costs, such as the salaries of actors, writers and directors, to be offset by incentives.

The incentives have made the United Kingdom a leading destination for big budget features, including the upcoming “Star Wars: Episode VII” from Lucasfilm, Marvel’s “The Avengers: Age of Ultron,” and the Oscar-winning “Gravity” from Warner Bros.

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richard.verrier@latimes.com