Wiggin partner Charles Moore says new TV tax credit in UK could boost the UK economy by about £1bn per year.
The Chancellor’s Budget announcement of a new UK tax incentive for high-end scripted TV production has had an overwhelmingly positive reaction throughout the sector. In this interim period before the industry consultation process begins with the Treasury, which is likely to result in legislation coming into force in April 2013, it is worth considering the implications that this tax incentive may have on the UK television industry.
For UK producers of shows such as Birdsong, Parade’s End and Strike Back, who have been forced to look overseas to close their financing in the absence of a UK incentive, it means that they will now be able to produce these culturally British projects at home. The proposed minimum production budget level of £1 million per hour means that the tax credit will not simply be subsidising productions that would have been made in the UK without an incentive. It will secure the domestic production of all those amazing British projects that are currently only being made overseas.
On a day-to-day level, a UK incentive will mean a simpler financing structure (with less of a reliance on overseas advisers and servicing companies), reduced costs of travelling cast and crew to overseas locations, stronger ties with UK financiers, studios and post facilities and an improved ability for producers to retain valuable IP rights and maximise revenues.
Naturally, concerns have been raised that the tax credit might simply be neutralised by the UK broadcasters attempting to reduce their licence fees and clearly this is an issue that will need to be addressed by the industry in the forthcoming months. In our research, it became clear that the £1 million per hour minimum budget level would help address this concern. By focussing on productions with budgets well in excess of the broadcaster tariffs, where international pre-sales, co-production finance and government subsidies are a necessity, there is less scope for an argument to push back on UK licence fees.
From the research that Wiggin and RSM Tenon conducted with the industry, which led to our submission to the Government in January, a UK tax credit structured along similar lines to the successful film tax relief will result in at least £350m per year of additional UK production spend, which would boost the UK economy by around £1 billion per year. One US network told us that the incentive would move the UK from being a location of “last resort” to one of the leading global destinations of high-end drama.
Given the suitability of TV drama for regional production, the benefit will have a substantial impact throughout the UK. HBO’s returning series Game Of Thrones, which has been filming in Northern Ireland as a result of some regional funding, has had a transformative effect on the local economy and highlighted the growth potential.
In short, the new TV incentive, together with the proposed incentives for animation and computer games, will undoubtedly capitalise on the huge success of the film tax relief and stimulate further job creation and skills and infrastructure development in the creative industries, as well as an increase in inward investment and the creation and worldwide exploitation of British intellectual property. We can look forward to the coming years with renewed optimism.
Charles Moore is a Partner at Wiggin