The UK government hasfinally launched its 20% tax credit for UK qualifying films.

The Treasury, which was dueto unveil details as far back as July, aims to give filmmakers 20% of theirbudgets via a tax credit even if films fail at the box-office.

But commercially successful filmmakers may be able to claim up to 30% of theirbudgets through the measure, which affords further relief on future income worth, when combined with the initial tax relief, 150% of the budget. This is aimed at encouraging commerciallysuccessful films.

The Treasury also confirmedthat the existing tax-based support, Section 48, would be extended to ease thetransition. Section 48, which usually provides 15% of a budget and was due toexpire in July next year, will continue to be granted if filmmakers startprinciple photography by July 2nd and shooting is completed by April5 2006.

"This new, moregenerous relief will ensure that the UK continues to be recognised as one ofthe best places in the world to make a film," said Paymaster General Dawn Primarolo.

Key to the thinking behindthe new credit is that it is, on paper at least, paid directly to filmmakersand cuts out the tax schemes that sprung up as middle-men between producers andinvestors under Section 48. The new scheme also appears to have cut outinvestors, as it offers a credit which filmmakers can cash in directly with thegovernment.

John Woodward, chief executive of support body the UK Film Council,called the measure "vital and effective".

"Obviously, as with Section48, the new tax credit will take a few months to bed down but it is extremelygood news that the new relief will apply to 100% of the film's costs - ratherthan just the money spent in the UK. The increase in the budget of films whichqualify for the tax credit from £15m to £20m is also very much welcome."

But the council also highlighted how the government has not introducedany distribution support, for which it has long been lobbying.

"We now look forward to continuing discussions with the Government onthe shared policy goal of improving the distribution of British films in thelong term," Woodward said.

The relief unveiled today is seen by the government and industrylobbyists as a template, with some in the industry aiming for significantimprovements in the months before the final version is enshrined in the FinanceBill next year. While the Film Council is still pushing for a distributionsupport, the working group headed by producers body PACT and research agencyBSAC is continuing to report to the government.