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Has the pendulum permanently swung from Film to HETV?
Frankly, it’s too early to tell
On the 18th August HMRC released the creative industry tax relief statistics for the year ending March 2022.
The results aren’t shocking to many in the sector; for the first time the amount paid out by HMRC in High-End TV (HETV) tax credit exceeded what was paid in Film Tax credit.
In the year ended March 2022 HMRC paid out £362M in film tax relief; most claims were for less than £100,000. The total amount paid out by HMRC represents a 41% fall from the previous year. There were 720 claims made during this period, compared to 900 the previous year. Whereas the trend for HETV claims is moving in a different direction. In the ended March 2022 £397M was paid out in HETV Tax relief in response to 355 projects, compared to £380M in the previous year, which represented 315 projects.
So, what do these numbers tell us? The swing is not due to a massive surge in the HETV productions within the UK; whilst the HETV pay-out increased by 4.4%, there is a suggestion that the UK Film industry slowed down, specifically the independent film market.
It’s already been recognised that the UK independent Film industry needs help. I’ve previously outlined innovative ways in which the BFI proposes to jump-start the industry.
The stats reflect the trend toward the increase in HETV productions are being made in the UK, mainly due to the large streamers, with budgets to match.
It would be wrong for us to take the HMRC stats in isolation without digging a little deeper. The year to March 2022 was a particularly turbulent year. Many film productions scheduled to shoot in the UK during that period are likely to have been delayed or even shelved; and overseas productions/investment planning to come to the UK may have decided against it due to increased costs resulting from Covid and travel restrictions.
Previously, inward investment (via overseas production companies) made up a significant volume of the claims paid out in film tax relief. Without these productions overall numbers were impacted.
It is also likely that the 2022 statistics were slightly distorted with many productions restarting close to the end of the period, and not claiming on their incurred cost in 2021. Covid closures in 2020/21 may have impacted 2022 statistics. HMRC ruling allows costs to be claimed up two years after expenditure. I do believe in the year to March 2023 we will see an uplift to the total of 720 film tax credit claims made in 2022.
All in all these stats reflect the great success story of film and HETV productions and the benefits to the UK economy.