With the UK's new film tax credit set to go into effect in just11 days, the government has finally provided details about its new tax regime.

The most significant point for producers is a change to the qualifying threshold for tax relief - at least 25% of a film's budget must be spent in the UK, not the 40% proposed in last year's consultation document.

"The lowering of the minimumUK expenditure threshold from the proposed 40% to 25%is great news as more films will be in a position to qualify for tax relief," saidJohn Woodward, chief executive of the UK Film Council.

The government has nowdefined qualifying UK spend as "that directly incurred in relation topre-production, principal photography and post-production activities which takeplace within the UK." Spending on development, distribution, and marketing will notqualify.

Producers group Pact notedits dismay about the narrow definition of qualifying UK spend, which forexample won't cover payments to UK companies or UK talent working on film shoots outsidethe UK.

"The new tax credit shouldprovide a real benefit to producers, which clearly reflects the Government'scommitment to the sustainable production of British films," said Andrea Calderwood, managing director of Slate Films and vice chairof film at Pact. "However, we are concerned that the effect of EU regulationsin this case may seriously endanger the prospects for British and Europeanproductions, while giving maximum tax advantages to US studio productions. Weare sure this is not the effect that either the UK Government or the EU intend and we hope to work constructively and urgently withthem to address this anomaly."

Pact said it would lobby toget the definition of UK spend broadened.

As announced in December,the benefit was higher than expected (net 20% for low-budget films costing £20mor less and 16% for higher-budget films) although it includes more restrictionsthan the current Section 42 and Section 48 laws, with the credit only applyingto the UK expenditure of a film's budget (not the entire budget as undercurrent rules) and only if it passes a new Cultural Test for British Film.

As expected, the governmentsaid the new relief will only go to film production companies, which it definedas "a company responsible for principal photography, post-production and fordelivering the completed film." Each film will be dealt with separately underthe tax law, and not as a slate of projects.

With this detail coming lessthan two weeks before the new credit will go into effect, producers say thatthere could be a hiatus in production this spring because they weren't able toplan ahead effectively until they had more clarity on the December announcement.

Woodward echoed hissentiments from December that the credit was very good news for the UK industry. "It providesthe certainty the industry needs to operate and will help the UK consolidate its positionas the most important film industry in the world after the US," he said.