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Animation UK, British Film Commission hail 'game changing' new tax relief system

BFC CEO Adrian Wootton speaking in Annecy

ANNECY: The UK animation sector is being boosted by “game changing” new tax-relief incentives, according execs from industry body Animation UK and the British Film Commission (BFC).

At an event here at MIFA celebrating the creativity and innovation of the UK’s animation space, senior executives hailed the positive impact of the government’s recent new initiatives to bolster high-end TV (HETV) and film production.

In March’s spring budget, chancellor Jeremy Hunt committed to providing more tax relief in HETV and film productions, introducing an extended independent tax credit for films that have budgets between £1m (US$1.36m) and £15m. He also pledged a 40% relief on gross business rates until 2034 for eligible film studios.

Animation projects can qualify as British by passing a cultural test, or as an official coproduction.

Producers developing HETV titles will benefit from changes to tax credits for visual effects (VFX) costs. In April, the rate of tax credit increased by 5% alongside the removal of the 80% cap for VFX costs in the audiovisual expenditure credits.

HETV shows and films previously had a headline credit rate of 34%, which equated to 25.5% in actual relief. That has now been increased to a higher ceiling of 40%.

“We now have some of the most competitive tax-relief systems in the world, which are brilliantly administered by the BFI,” said Kate O’Connor, executive chair of Animation UK. “It’s the icing on the cake for the UK animation sector, which is one of the most diverse and dynamic in the world. The UK is now [seen as] a smart investment and a brilliant partner for coproduction.”

BFC CEO Adrian Wootton said the tax relief schemes would particularly benefit animation studios producing feature-length projects. The changes in legislation, he added, make the UK a much more attractive partner for collaboration among the international animation studios attending Annecy, with investment set to stream into the UK sector.

“We’re finding that new lenders and borrowers are coming into the marketplace because producers have that potential 40% in their back pockets,” Wootton said. “It’s a game-changer and we’re seeing a change in attitude. European countries are certainly having conversations with us about copros in a way they haven’t for many years.

“[The tax relief] has only been in operation since April and people are only just beginning to claim it now. We’re all keen to develop this opportunity for change.”

The event, held at the UK pavilion in the Imperial Palace at Annecy, also featured a case study for animated movie The Amazing Maurice, a 2022 family-friendly adaptation of the Terry Pratchett book for Sky Cinema. UK prodco Cantilever Media is currently readying a sequel, which would likely not have been possible without the recent tax incentives.

Andrew Baker, founder and CEO of Cantilever and Kazoo Films said: “We couldn’t have done the sequel without the higher tax credits because the market and landscape has changed. The tax credit has been an essential part, because it really helped make up for the fact the market keeps shifting and it’s harder for distributors to afford the minimum guarantees.”