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Film tax relief
Legislation to counter a complex tax avoidance scheme exploiting the tax relief intended for film production in the UK is to be included in the 2006 Finance Bill, effective from 10 March 2006. The scheme combines a film sale and leaseback partnership with a separate but parallel investment partnership. It provides individuals using the scheme with a tax advantage greater than the amount invested while avoiding any taxable income at a later date. Under the changes announced by the Government, investors using the scheme will have any claims for tax relief relating to the films partnership restricted in such a way that will ensure that tax is payable on an appropriate share of the income from the film partnership in later years.
As announced at the 2005 Pre-Budget Report, a new film tax relief will deliver to small budget films a minimum benefit worth 20% of total qualifying production costs, and large budget films will be able to claim a benefit worth at least 16% of total qualifying production costs.
