New Screen Sector Report shows UK Tax Reliefs fuel unprecedented levels of UK production
Wednesday October 10 2018
New Screen Sector Report shows UK Tax Reliefs fuel unprecedented levels of UK production
UK production spend worth £7.9b in a single year, the highest ever recorded
- Film production totalled £1.72 billion in 2016, a new record, up 47% from £1.16 billion in 2013
- High-end television totalled £896.7 million, more than double from £414.9 million in 2013
- Direct spend across all screen sectors on production totals a record £3.16 billion in 2016, up from £2.70 billion in 2015 and doubling over 9 years
- Growth of screen industries outstripping wider economy with a 71% increase in jobs in film, high-end television and animation programme production between 2013-2016
- Screen industries show higher levels of labour productivity than the UK average
- Rapid growth of screen sectors generates over £850 million in capital investment in new production facilities right across the UK
- UK screen talent and technicians creating commercially and critically successful productions enjoyed by audiences worldwide
The BFC contributed to a new independent report published yesterday, showing how government tax reliefs across the UK’s screen industries are helping to power unprecedented levels of production, creating thousands of jobs, growing businesses and infrastructure, generating record levels of inward investment, boosting exports of UK productions and services internationally, and creating spill over benefits for other industries. The report reveals an unprecedented return of £7.9 billion to the UK economy in 2016.
Screen Business: How tax incentives help power economic growth across the UK is a comprehensive analysis of the economic contribution of the tax reliefs for film, high-end television and, for the first time, analyses the new tax reliefs for video games, TV animation programmes and children’s TV programmes. The report uses the latest complete dataset available from 2016.
The report has been produced by analysts Olsberg SPI in partnership with Nordicity, commissioned by the BFI, working with industry partners including the British Film Commission (BFC), Pact, Pinewood Group, UK Interactive (Ukie) and UK Screen Alliance.
Philip Hammond, Chancellor of the Exchequer, said in the report, “From TV shows like The Crown, to films like Darkest Hour […] our creative industries are intrinsic to the rich cultural fabric of the UK. But they’re also an important part of a dynamic and diversified economy, and a key component of our great, global trading nation. That is why this government is committed to supporting our highly-skilled and innovative creative industries through creative sector tax reliefs […] I am confident that the creative industries will continue to grow, provide strong employment and be the face of British culture to the world in future years.”
Adrian Wootton OBE, CEO of the British Film Commission said, “Film and high-end TV are big business, and the record-breaking inward investment figures demonstrate outstanding growth and the success of the UK in continuing to meet increasing demand, delivering world-class skills, talent and technical expertise. This fantastic achievement also spans animation and games, seeing the entire screen sector delivering at the highest level throughout the UK’s nations and regions, and translating to economic growth, job creation and training opportunities. It is wonderful to see these figures clearly demonstrating the value of the tax reliefs in reaping incredible dividends for our economy and also for industry in terms of boosting infrastructure and opening up new business opportunities.”
FILM
Tax relief, spend and jobs
Since its introduction in 2007 the film tax relief has helped generate significant increases in production expenditure, growing from £849 million in 2007 to a record £1.72 billion in 2016, of which £1.37 billion was inward investment spend. Since 2013, the film tax relief has supported higher-budget films such as Guardians of the Galaxy, the Star Wars franchise and Fantastic Beasts and Where to Find Them, all made in the UK alongside independent UK films such as Lady Macbeth, Their Finest and God’s Own Country.
When wider economic impacts – revenues from industries that derive benefits from film production and content – are taken into account, the overall economic contribution of film in 2016 totals £5.23 billion in GVA, yielding £1.28 billion in tax revenue. In 2016, an estimated £343.6 million of tax relief was claimed against total expenditure in the UK of £1.72 billion. Every £1 of tax relief generated £7.69 in GVA, the highest return recorded.
Provisional figures for 2017 indicate record spend on UK film production of £2.0 billion, a 16.5% increase on 2016.
Film is a substantial employer with production generating 28,350 full-time equivalent jobs in 2016 contributing £2.46 billion in GVA and yielding £619.7 million in tax revenue. Adding the wider impact across the film content value chain as well as spill over impacts raised the total employment impact to 86,800 jobs, £5.23 billion in GVA and £1.28 billion in tax revenue.
Films that went into production in the UK last year included the blockbuster Avengers: Infinity War, Solo: A Star Wars Story, Dumbo, Mission: Impossible – Fallout, Aladdin, Yardie, Phantom Thread, The Boy Who Harnessed the Wind and Peterloo.
International trade and exports
Film is a significant source of export revenue for the UK generating £1.71 billion and contributing to a trade surplus of £926.0 million in 2016. Film also showed a significantly strongest export-to-GVA ratio of 0.38 compared to the UK’s next best sector (information and communication) of 0.27.
Tourism and other benefits
Films with a strong UK story, place and culture such as Harry Potter, Paddington and Kingsman have featured prominently in UK tourism campaigns. Visitors to the UK spent an estimated £597.7 million in film-related tourism generating £628.3 million in GVA, 13,440 jobs and yielding £194.9 million in tax revenues. Merchandise sales related to films made in the UK were worth an estimated £295.0 million in 2016.
HIGH-END TELEVISION
High-end television (HETV) production in the UK has also boomed since the introduction of the tax relief in 2013. Major shows that have been hits around the world such as Game of Thrones, The Crown, The Night Manager and Black Mirror have shown the UK has the capacity in its infrastructure, services and skills to make large-scale prestige productions, including for major online providers such as Netflix and Amazon, which are now investing heavily in original UK content. Netflix has recently announced it is seeking to establish a studio base in the UK to service future productions.
Tax relief, spend and jobs
High-end TV production expenditure rose by 4.5% in 2016 to a record of £896.7 million (£858.1 million in 2015). Inward investment and co-production has continued to grow, reaching £554.2 million in 2016, a 28.4% increase on £431.6 million in 2015. Further economic impact generated by HETV content boosted its overall GVA contribution to £1.71 billion in 2016, yielding £466.1 million in tax revenues.
Provisional figures for 2017 indicate growing spend on UK high-end television production to £984.6 million.
High-end television production is also a major employer generating 13,090 jobs. Adding the wider impact across the content value chain as well spill over impacts raised the total employment impact to 32,660 jobs.
Tourism and other benefits
The international success of high-end television productions such as The Crown, Downton Abbey, Outlander, Poldark and Game of Thrones demonstrate a major impact on tourism. The report estimates that HETV-related visitors to the UK spent £266.2 million in 2016, generating 5,990 jobs, £267.8 million in GVA and £84.2 million in additional tax revenue.
VFX
This report is the first to analyse the VFX sector independently of its contribution to the wider production sector. Digital production, supported as part of the UK tax reliefs, is driving business growth and innovation through UK-based productions such as Star Wars: The Force Awakens, Ex-machina, Paddington and Gravity.* This success has fuelled significant commercial investment in VFX facilities establishing the UK as a global leader in delivering award-winning VFX work, in turn attracting further inward investment production, creating jobs and tax revenues. Direct spend on tax relief supported VFX was estimated to be £275.4 million for 2016 generating £315.1m in Gross Value Added (GVA) and 6,120 jobs. The impact of the VFX work increases to £773.9 million in GVA when spill over impacts are added.
*It is important to note that in order to access the film and high-end television tax reliefs, there is no obligation to carry out all production activity in the UK; it is possible to qualify for the UK Film Tax Relief by carrying out VFX only, as long as the necessary criteria are satisfied.
The Tax Reliefs
The tax reliefs play a crucial role supporting the UK’s competitiveness as a creative destination, attracting international inward investment production in the face of strong global competition. They have also helped lead to a repatriation of high-end TV productions that would otherwise been made outside the UK.
Attracted to the UK’s world-class skills, facilities and diverse locations, film and high-end television production attracted £1.93 billion of inward investment and international co-production in 2016. Tax relief supported production is also fuelling further private sector investment with more than £850 million identified spend on facilities across the UK to service the growth in production. New and developing studio spaces include Bad Wolf near Cardiff, Pentland in Scotland, Church Fenton in Yorkshire, Belfast Harbour Studios in Northern Ireland, Barking and Dagenham in London, Shepperton Studios, Warner Bros. Studios Leavesden, Bristol’s The Bottleyard Studios and the Littlewoods building in Liverpool.
Find out more information on the UK tax reliefs.