Revised cultural test for film tax relief
On 28 January 2015, The Films (Definition of "British Film") Order 2015 was made, which issubsantivley identical to the draft published on 5 December 2015. This order amends the cultural test set out in the Films Act 1985, by which a film must be certified in order to access film tax relief.
The main change is that the order replaces "UK", "British" and "English" with "EEA" in relation to subject matter and qualifying persons. Making the test wider in this way will make it a lot easier to fulfil the criteria. As well as this, greater weight is to be given to original dialogue in an EEA language (six points instead of the previous four), to visual and special effects and to shooting, if at least 80% of them take place in the UK (four points instead of the previous two). This will make the test based on achieving a total of 18 out of a possible 35 marks rather than 16 out of a possible 31 as it was previously.
The full cultural test can be viewed on the BFI website.
This is in line with the government's announcement of these changes in April 2014. They changed the minimum UK expenditure to 10% of the budget rather than 25% and changed the structure of the relief available to a rate of 25% on the first £20 million of qualifying production expenditure and 20% thereafter for all films regardless of budget.
Now that this draft order has been passed, new applicants should use the revised cultural test to submit their tax relief claims to HMRC on expenditure backed-dated to 1 April 2014. Letters of comfort will now only be issued to those applying under the revised cultural test. Those who began principal photography or received letters of comfort prior to 1 April 2014 will still need to apply under the old cultural test.