Loopholes allowing TV productions to access UK tax relief for films are to be closed, the Government announced in its budget on Wednesday (April 17).
The move is expected to stem a rash of TV projects that have accessed the UK's influential 100% tax write-offs under Section 48, leading to calls of widespread abuse. The definition of a British film is expected to be overhauled in order to rule out TV projects.
"This will refocus the reliefs on the original intention of stimulating the production of films in the UK and to promote growth, employment, investment and opportunities in the British film industry," said Chancellor Gordon Brown.
The decision creates a major headache for producers as the move is effective 17 April 2002. The fate of large-scale projects such as Dinotopia, which is still in production, is unclear.
While many local TV series such as Changing Rooms are to be ruled out, UK support body the Film Council is expected to look at whether the regulation changes can find a middle ground to encompass such high-end drama productions as Band Of Brothers. The epic World War 2 drama series gave local crews and facilities a massive boost by shooting in the UK.
But the move will be welcomed by many in the film sector who feared that the level of TV productions claiming relief might have caused the Treasury to crack down on the tax breaks as a whole.
"The brutal truth is this was a necessary measure to keep Government support intact for British cinema production," said John Woodward, head of the Film Council. "In reality, what the Chancellor has done is pull the tax break back into line with his original intention."