Treasury also paid £150m to TV shows that pass ‘cultural test’ to qualify as British in scheme to encourage creative enterprises
The government paid out almost £600m in tax relief last year to the makers of blockbusters including Baby Driver, Star Wars and T2: Trainspotting, as well as big-budget TV dramas including The Crown.
The payouts were part of £751m that the Treasury awarded in tax relief to films, high-end dramas, video games, animations, children’s TV shows and theatre productions that passed a “cultural test” that qualified them as British.
The government’s figures showed that the total awarded in tax relief in the creative sector rose by a third year-on-year from £564m in 2015.
The test includes criteria such as the cultural content of a production, how much of it is shot in the UK and the proportion of stars and crew who are from Britain or Europe.
The government’s tax credit system has proved hugely successful in stopping big-budget film and TV productions, as well as talent such as games makers and special effects workers, going to cheaper locations such as eastern Europe or to other countries offering bigger incentives.
It has also helped attract investment from the deep-pocketed newer arrivals on the film and TV scene, such as Netflix and Amazon, which have backed productions in the UK including The Crown, which had a total budget of £100m, and fashion drama series The Collection.
Last year there were 175 films completed in the UK that claimed tax relief, with the Treasury paying out £415m, up from £339m the previous year. Relief payouts for high-end TV – dramas that cost £1m or more per episode – rose from £104m to £163m.
Animation tax credits fell from £61.8m to £49.3m. Children’s TV qualified for just £5m in tax relief. Theatre, the newest creative sector to benefit from the tax relief system, surged, with £46m paid out across 1,570 productions, treble the £14m paid out across 175 productions the previous year.
“From film directors to video game developers, UK creative leaders are championing British culture and innovation both at home and abroad,” said MP Mel Stride, the financial secretary to the Treasury and paymaster general.
“The creative industries employ 2 million people across all parts of the UK. These tax reliefs are helping to ensure creative sector companies can continue to hire people and boost local economies.”