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Last Updated: Wednesday, 22 March 2006, 17:22 GMT
Producers warn over film tax move
Rachel Weisz in The Constant Gardener
The Constant Gardener, starring Rachel Weisz, was set in Kenya
Oscar-winning British film The Constant Gardener probably would not have been made in the UK under new funding rules, its producer has said.

A revamped film tax system, unveiled in Chancellor Gordon Brown's Budget, will come into force on 1 April.

Producer Simon Channing-Williams said there was "a very strong chance" The Constant Gardener would not be made if it was being financed now.

But the government said the changes would be better for the film industry.

THE 2006 BUDGET AND FILM TAX
20% tax credit to films with budgets under 20m
16% tax credit to films with large budgets
Films must spend at least 25% of their budgets in the UK to qualify for tax relief
The 25% above is down from the proposed 40%

But some producers fear it may mean British movies that need to be filmed abroad will no longer be able to raise enough money.

Much of the Constant Gardener - which won the Oscar for best supporting actress for its star Rachel Weisz - was filmed in Kenya, Germany and Canada.

Mr Channing-Williams, who also produces Mike Leigh's films, said he believed money spent in those locations would not qualify under the new rules.

Andrea Calderwood, managing director of production company Slate Films and vice chair of film at producers' trade body Pact said she was "concerned" about the effect of EU regulations.

Tax credit 'welcomed'

They "may seriously endanger the prospects for British and European productions, while giving maximum tax advantages to US studio productions", she said.

"We are sure this is not the effect that either the UK government or the EU intend and we hope to work constructively and urgently with them to address this anomaly."

But Pact welcomed the chancellor's move to give 20% tax credit to films with budgets under 20m and 16% for more expensive blockbusters.

"The new tax credit should provide a real benefit to producers, which clearly reflects the government's commitment to the sustainable production of British films," Ms Calderwood said.

Today's announcement is good news for the British film industry and makes the UK an attractive place to make films
John Woodward
UK Film Council
Films will now be required to spend at least 25% of their budgets in the UK to qualify for tax relief - down from the proposed 40%.

That will mean more films are eligible for the subsidy, according to the UK Film Council - giving Hollywood a bigger incentive to make movies in Britain.

UK Film Council chief executive John Woodward said: "Today's announcement by the chancellor is good news for the British film industry and makes the UK an attractive place to make films.

"It provides the certainty the industry needs to operate and will help the UK consolidate its position as the most important film industry in the world after the US."

A spokesman for the Treasury said: "We think the new reliefs are a well-targeted replacement for the old system of reliefs.

"They continue to deliver very generous levels of support but are now targeted directly at film-makers, therefore providing better value for money for UK taxpayers and at the same time guaranteeing the sustainable production of culturally British films."

The system of film tax relief was changed because the government said investors were abusing the old regime.


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