The UK government is launching a consultation phase on a possible reform and merger of film and television tax credits

The UK government has launched a consultation period asking industry leaders to comment on plans to merge the film, animation, high-end television and children’s television tax credit into a single tax credit.

The consultation period runs until 9 February 2023, and the reforms will be implemented in the spring of 2024.

The government said the proposals aim to “simplify and modernize” the exemption system and ensure it “stimulates growth in the audiovisual sector while remaining fiscally sustainable”. But the government said there would be no change to the existing criteria companies must meet to access tax breaks.

Currently, all UK licensed films of any budget can claim a cash discount of up to 25% on UK licensed releases. The tax credit is limited to 80% of core expenses. Within the 80% limit, there is no limit to the film budget or the amount to be paid for the lighting.

The proposal also includes some specific changes to the tax credits for high-quality television. The most notable change is a potential increase in minimum spend for high-end TV productions, currently set at £1 million ($1.2 million). Tax credits for high-end TVs were first introduced in 2013, with the government saying the current system “no longer reflects current production costs”.

The UK Treasury said high-end TV accounted for 38% of the total amount of tax breaks for creative industries in 2022, while films accounted for 35%. This is the first time that the amount of the high-end TV tax credit exceeds film.

The government said its desire to modernize the system was due to the increasing “overlap between licensing requirements and legislation” for film and high-end TV.

In response, Harriet Finney, BFI Deputy CEO – Director of Corporate and Industrial Affairs, said news of the consultation “shows that the government recognizes the value of the sector and sees the huge potential for continued growth and job creation.”

Finney added: “We welcome the consultation and will continue to work closely with the Government and our industry partners to support improvements to these incentives and ensure they deliver the best possible return for the UK economy.”