A Big Re­lief

New tax cred­its are giv­ing an im­me­di­ate jolt to the U.K. an­i­ma­tion in­dus­try. By Thomas J. Mclean

Animation Magazine - - International -

IDigby Dragon

t’s only been less than a year since the United King­dom en­acted tax re­lief cred­its aimed at re­viv­ing its TV an­i­ma­tion in­dus­try, and so far the re­sults have ex­ceeded ex­pec­ta­tions.

“We’ve gone from a sit­u­a­tion where last year, 2012 to 2013, there were only two an­i­mated tele­vi­sion dra­mas that were com­mis­sioned by Bri­tish broad­cast­ers to do­mes­tic an­i­ma­tion com­pa­nies,” says Adrian Woot­ton, chief ex­ec­u­tive of Film Lon­don and the Bri­tish Film Com­mis­sion. “And al­ready, in nine and a half months, we’re now up to 25 new do­mes­tic tele­vi­sion shows that have been com­mis­sioned and we have a bunch of co-pro­duc­tions go­ing on that just frankly wouldn’t have hap­pened be­fore.”

The tax re­lief of­fers com­pa­nies that spend at least 25 per­cent of a pro­duc­tion’s budget in the U.K. to get back in cash from the govern­ment 25 per­cent of what they spend. Un­like a sim­i­lar tax re­lief plan for live-ac­tion tele­vi­sion, there is no min­i­mum budget, and nei­ther credit has a sun­set clause that would lead them to ex­pire.

As a re­sult, Woot­ton says: “They’re pre­dict­ing a 300 to 400 per­cent turnover in the in­crease on U.K. spend on an­i­ma­tion com­pared to 2012. That’s how sig­nif­i­cant a trig­ger the an­i­ma­tion tax re­lief is be­cause for the first time in a long time an­i­ma­tion com­pa­nies from all over the world are say­ing, ‘Yes, we can place the work here.’”

For U.K.-based an­i­ma­tion stu­dios, large and small, the tax re­lief has made an im­me­di­ate im­pact.

“The tax credit has al­lowed us to push what is achiev­able in an­i­mated se­ries,” says Oli Hy­att, cre­ative di­rec­tor of Lon­don-based Blue Zoo An­i­ma­tion Stu­dios. “For ex­am­ple, Digby Dragon, a new show we are just mov­ing into pro­duc­tion on, would sim­ply not have been pos­si­ble to achieve in the way we have en­vi­sioned with­out the 25 per­cent tax credit.”

The credit also has brought in work for hire projects, Hy­att says. “Pre-tax-credit, this would has never hap­pened,” he says. “We hadn’t had in­ward in­vest­ment from over­seas in to the pro­duc­tion for the pre­vi­ous 14 years our com­pany was run­ning, so in those terms it re­ally is a game changer.”

Julie Stall, VP of pro­duc­tion for Toron­to­based Port­fo­lio En­ter­tain­ment, says the credit is very at­trac­tive be­cause of its broad def­i­ni­tion of what spend­ing qual­i­fies a project.

“The def­i­ni­tion of ‘U.K. spend’ is fairly broad in that the credit is based on goods or ser­vices ‘used or con­sumed’ in the U.K. and isn’t re­stricted to U.K. la­bor,” she says. “Al­though the re­bate per­cent­ages in some coun­tries may be higher than in the U.K., the def­i­ni­tion of el­i­gi­ble ex­pen­di­tures may dif­fer, so it’s im­por­tant to ac­tu­ally run the num­bers in var­i­ous sce­nar­ios be­fore de­ter­min­ing the ac­tual value of the cred­its.”

Port­fo­lio has en­joyed a U.K. co-pro­duc­tion ar­range­ment on its se­ries The Cat in the Hat Knows a Lot About That, and Stall says the cred­its are a good in­cen­tive to team up with more U.K. com­pa­nies. “In the past, it has been a chal­lenge fi­nanc­ing co-pro­duc­tions with the U.K., partly be­cause of com­pe­ti­tion for broad­cast space and the high cost of pro­duc­tion in the U.K.,” she says. “But the tax cred­its re­ally as­sist in clos­ing the gap and pro­vid­ing some flex­i­bil­ity with fi­nanc­ing op­tions.”

Hy­att says there has been a no­tice­able in­flux of busi­ness en­quiries. “In terms of the type of in­ter­est from abroad, it has gone a bit crazy,” he says. “Some big play­ers are con­sid­er­ing set­ting up stu­dios, some are look­ing for copro’s, some look­ing to sim­ply farm en­tire projects out. We re­ally have been put back on the map!”

Moses Ny­achae, di­rec­tor of film and tele­vi­sion at the Lon­don ac­count­ing firm of Saf­fery Champ­ness, says the tax credit is be­ing sup­ported with in­vest­ments in in­fra­struc­ture and ed­u­ca­tion to en­sure the U.K. can sup­port the work it hopes to bring in. “The U.K. govern­ment is in­vest­ing heav­ily in train­ing and in­cen­tiviz­ing R&D to en­sure the U.K. has world-class talent and fa­cil­i­ties.”

Woot­ton’s of­fice has brought in an­i­ma­tion ex­ecs from all over the world — in­clud­ing high­pro­file vis­its from Amer­i­can and Cana­dian del­e­ga­tions — to tour the U.K. and its fa­cil­i­ties and sell them on the idea of bring­ing work there.

“U.K. pro­duc­ers are com­ing to the ta­ble with more money and this can only be good news to all par­ties look­ing to get their shows fi­nanced and pro­duced,” says Ny­achae. “I would say it’s a lit­tle too early to tell whether the in­cen­tive will re­sult in a sig­nif­i­cant in­crease in co-pro­duc­tion ac­tiv­ity, but what we do know is that a lot more dis­cus­sions are hap­pen­ing be­tween U.K. pro­duc­ers and their over­seas coun­ter­parts, so hope­fully a good num­ber of these con­ver­sa­tions will trans­late in to ac­tual co-pro­duc­tions. The next 12-18 months will be in­ter­est­ing in that re­spect.”

Julie Stall

Adrian Woot­ton

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