On 5 December 2014, the government released in draft The Films (Definition of "British Film") Order 2015. This order will amend 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.
Once this draft order has been passed, companies will be able to submit their tax relief claims to HMRC on expenditure backed-dated to 1 April 2014. Until then, applicants who are still in principal photography on or after 1 April 2014 may use either the existing cultural test or the revised test to apply. However, letters of comfort will only be issued to those applying under the revised cultural test. Those who received letters of comfort prior to 1 April 2014 will need to apply under the existing cultural test.
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