In today's global production environment, many international film production centres are introducing or enhancing their film tax incentive offers in order to remain competitive. Without a rebate, production centres find themselves at a disadvantage when looking to attract inward investment or retain domestic production.
In today's global production environment, many European and other international film production centres are introducing or enhancing their film tax incentive offers in order to remain competitive. Without a rebate, production centres find themselves at a disadvantage when looking to attract inward investment or retain domestic production.
According to the 2010 Oxford Economic report The Economic Impact of the UK Film Industry, the UK's film tax relief is vital to sustaining current levels of global competitiveness and job creation. 'Without the UK film tax relief in place, UK GDP would be reduced by around £1.4 billion a year. That compares with a current cost of the film tax relief of around £110 million a year, meaning that an extra £13 in GDP is generated for every £1 invested.'
In the USA, the recent year long extension of California's film tax credits has proved to be welcome relief for the industry there, as it has already kept thousands of jobs within the State that would otherwise have moved out. 
For producers and accountants, analysing and keeping up to date with tax rebates in different jurisdictions and building the variables into a budget can be complicated. An extremely valuable resource for assisting in understanding the differences and similarities between the incentives is Entertainment Partners' website. Their production incentives information is detailed by individual jurisdiction, and allows for incentives to be compared against each other.
The first step in ensuring the expected value of the tax relief in any jurisdiction is correct is to create an accurate schedule and budget by an experienced producer or production accountant. Given the schedule and the budget together are the documents which create the finance plan, they are essential for producers when raising the money to finance the production.
An example of the need for accuracy within the budget is around whether a production incentive could apply to particular labour costs. The labour must be correctly identified as resident or distant, the numbers of crew in each category must be known, and the number of weeks or days they are needed for. These essential elements will help to create an accurate figure of how much will attract an incentive (which in itself will be different in different territories).
For low budget and very low budget British qualifying films, different arrangements for performers may be used, all of which are outlined in the PACT/Equity cinema agreement. The budget will need to be certified by a member of the Production Guild of Great Britain.
Industry standard software is available to help when putting together a budget. Movie Magic Budgeting 7 , for example, has been designed to assist with complex budgeting scenarios. It allows for elements to be pulled through from Movie Magic Scheduling, helping to save time and ensure accuracy. It also allows for multiple incentives, credits, and rebates to be applied, compared, and analysed.Here is a video to show you how:
There are two below the line departments in the UK film industry
that have negotiated agreements outlining rates of pay. These are
the PACT/BECTU major US studio feature film construction agreement
and the PACT/BECTU major studio feature electricians agreement.
Sargent-Disc has recently analysed the average industry pay scales
for a range of departments and grades in the UK industry to help
when budgeting for production.
The pay scales are currently available to Sargent Disc payroll customers through the new online payroll portal SD Online 2.0.
The rules surrounding qualifying a film as British and the UK
tax relief has been detailed in our previous insight article UK Film Tax Relief.
In addition to the tax relief, there is a production fund administered by the British Film Institute that British qualifying films may apply to, and regional money administered by:
Sargent-Disc can provide a range of services to a production, from pre-production through to post. For information about our services, please contact us at Sargent-Disc. Let us help you with your production and employment enquiries about working in the UK, and take the drama out of your production. Our services include:
For advice, guidance and facts about international production incentives, and to compare them online, visit the incentive solutions section of the Entertainment Partners website or contact them directly here:
There are also a number of specialist accountancy and audit
firms in the UK that advise clients when structuring British
qualifying films. Here are just a few:
Grant Thornton UK LLP
Christine Corner, Partner
Tel: +44 (0)20 7728 3171
Email: [email protected]
John Graydon, Partner
Tel: +44 (0)20 7841 4281
Email: [email protected]
Steve Joberns, Principal
Tel: +44 (0)20 7312 6558
Email: [email protected]
 Los Angeles Times, September 13 2011 http://latimesblogs.latimes.com/entertainmentnewsbuzz/2011/09/on-location-sacramento-delivers-a-mixed-bag-for-hollywood-film-tax-credits.html