Since its birth in the early 19th century, the British film industry has provided us with some of the world’s most acclaimed motion pictures. Blockbusters such as Trainspotting and The Italian Job have won awards in abundance and regularly feature in top ten lists; they are a showcase for the success of the British film industry over the years. However, the recent introduction of new tax rules is going to have a huge and damaging effect on the British film industry.
Despite having gone through numerous booms and slumps, the current state of the industry seems to be going from strength to strength. In January, British films, including The Queen and The Last King of Scotland, racked up 16 Oscar nominations between them, contributing to one of the best ever years for the British film industry.
However, the incoming change to industry taxes could mark the end of this success and see the decline of British film. The government has effectively closed a loophole that allowed the rich to fund high-risk ventures and use any losses to reduce their tax bills. It is thought that this will scare off investors who will have no guarantee of breaking even if their film is a flop.
Duncan Reid, head of investment at Ingenious Media – one of the largest financiers in the British film industry – has said that numerous influential investors would “definitely pull out” of the film industry. In the past, his company has raised money for films such as X-Men: The Last Stand and Garfield 2, but he says the new rules will mean a “large shrinkage” in available funds, claiming that “the advantages of being able to write off losses against tax were really important for attracting investors. Film production activity in the UK will fall dramatically.”
Despite the dangers these new rules pose to British cinema, the UK Film Council has argued that the new rules are not aimed at the film industry but at cutting down on tax bill reductions. A spokeswoman said: “This is not about film, it’s about tax avoidance. It’s part of an ongoing crackdown by the government.” However, the effects of this new rule are beginning to show already.
The planned remake of the St Trinian’s film could even be scrapped because of the change, according to its financiers. The rule is thought to have the biggest effect on films whose backers have dropped out since it was introduced. Talking to the newspaper Screen Daily, Paul Brett of Prescience Film Finance revealed the extent of damage: “We’ve got funding that we won’t be able to use. A lot of UK films that were going to shoot over the next few weeks are going to fall apart.”
Unless something else is done to attract investors, the future looks bleak for the British film industry. However, it has overcome similar financial problems in the past, suggesting that all is not lost.
In 2004 the government closed a related tax loophole, and it is thought that around 40 films were affected, including The Libertine – with Johnny Depp – which hurriedly found new cash to take its film shoot to the Isle of Man. Another film threatened by the changes, The Constant Gardener, went on to win an Oscar for actress Rachel Weisz.
So perhaps the future could hold some promise after all. And for the sake of British film, let’s hope so.
