British film industry tax breaks approved by EU

Government plans to extend tax breaks for the British film industry have been approved by the EU.

Under the scheme, film production companies can claim tax relief of 25% payable towards the cost of production.

Chancellor George Osborne said he hoped the move - first announced in the Budget - would help attract more blockbuster productions to the UK.

But it needed to be passed by the EU under state-aid rules that control government support for companies.

EU state-aid rules control the giving of a competitive advantage to companies through government support.

In the March Budget, the government announced that it would increase the rate of film tax relief to 25% for all qualifying productions.

Previously, the rate was 25% for the first £20 million of qualifying expenditure and 20% for spending above this threshold.

The British Film Institute said the expansion of the tax relief put all productions on "a parity" with each other.

Recent British film successes that would have benefited from the new rate include Far From the Madding Crowd and Woman in Black 2.

Mr Osborne said: "These tax credits, that support both film and TV production, create around £2bn worth of business for Britain.

"That's many thousands of jobs and lots of different industries, not just acting but film-making and costume design and set design.

"All of those things are really brilliant jobs supported by this brilliant industry. It's also a great advert for the country."

The chancellor made the announcement on the set of Agatha Raisin, a Sky One TV detective series being filmed in Wiltshire. The show, starring Ashley Jensen, is one of the TV series which is benefitting from the scheme.

The measure means a British film costing £40m would get an extra £1m towards production costs.

Amanda Nevill, chief executive of UK film body the BFI, said: "The film tax relief is a key ingredient in the UK's winning combination of outstanding film-making talent and crews, world-leading studios and facilities, and iconic locations.

"It keeps us competitive on the world stage, and helps grow our economy and create jobs at home.

"We warmly welcome this extension to the tax relief and the government's continued commitment to the UK's thriving film industry."

The tax breaks have already funded £8bn of production costs, including films such as Gravity, Maleficent and Harry Potter.

The Treasury said 222 films received such support in 2014.