The UK Government has implemented a Business Rates Relief for Film Studios (the Scheme) under section 52 of the Subsidy Control Act 2022 (the Act). Under the Scheme, film studios in England will receive a 40% reduction on gross business rates bills until 2034.

Business rates are an annual tax on non-domestic properties, based on their ratable value. The Valuation Office Agency (VOA) in England, which operates independently of the central government, assesses this value. The VOA conducts a revaluation every three years. During the 2023 revaluation, business rates for film studios saw a significant and unexpected increase, much higher than the average rise experienced by other sectors. As a result, without government intervention, film studios in England will likely need to offset these costs by raising fees for productions.

The Scheme will function alongside the Audio-Visual Expenditure Credit (AVEC), introduced by the UK Government in 2006 to support film production companies, which are the customers of film studios, in producing ‘culturally British’ films. AVEC offers tax credits worth between 34% and 39% of UK production costs. To qualify as ‘culturally British’, AVEC includes a ‘cultural test’ requiring a certain proportion of spending and crew to be based in the UK.

The Scheme will be available to properties classified as ‘film studios’ for valuation purposes by the VOA. The government estimates that approximately 40 properties will be eligible. There is no maximum award amount for the Scheme, but it is estimated to cost £5 million in its first year (2024 to 2025), increasing to £50 million by 2028 to 2029.

Through the Scheme, eligible film studios in England will receive a 40% reduction on gross business rates bills until 2034. The relief once implemented will be backdated to 1 April 2024. 

The government will reimburse local authorities that use their discretionary relief powers under section 47 of the Local Government Finance Act 1988 (as amended) to grant relief. It is the responsibility of individual local billing authorities to establish a local scheme and decide, based on this guidance, when to grant relief under section 47.

Additionally, the government will fully reimburse billing authorities and major precepting authorities for any loss of income under the rates retention scheme resulting from the relief granted through a grant under section 31 of the Local Government Act 2003.

Eligibility Principles

The Scheme is available for any chargeable day within the financial years 2024/25 to 2033/34 for a hereditament that, on the chargeable day, is:

1. Used (or, if unused, appears likely to be used next) for the production of films or television programmes, and includes sound stages or film sets, either wholly or partially, and
2. Classified by the Valuation Office Agency (VOA) as a studio within one of the following categories:
   1. Temporary or semi-permanent filming studios
   2. Older filming studios, whether converted or purpose-built
   3. Modern industrial conversion filming studios (typically converted post-2010)
   4. Modern purpose-built filming studios (typically built post-2010)
   5. Campus sites

These types of facilities experienced exceptionally large increases in the 2023 revaluation. Relief is not available for materially unaltered industrial premises, even if occupied by a studio. The VOA descriptions in the rating list or the “Scat” code should not be used for this test. The VOA will inform billing authorities if they have a hereditament that meets these conditions.

The Scheme is available to new, existing, and expanding facilities. It also applies to conversions of previously industrial buildings, provided they meet the above criteria. As of early 2025, the government anticipates that approximately 40 hereditaments will qualify across about 25 billing authorities.

There are no occupation conditions for film studio relief. Relief is available as long as the above conditions are met, regardless of whether the property is occupied or if there are changes in occupation or ownership.

Clawback

The relief includes a clawback mechanism, ensuring that any studio experiencing a rateable value reduction after a successful challenge of the VOA’s valuation will have their relief proportionately reduced. This ensures that only studios genuinely in need of support will continue to benefit.

Whilst the Government acknowledges the risk that the Scheme might benefit some films that are not ‘culturally British’. However, it notes that data from the BFI indicates that 90% of productions in the UK are considered ‘culturally British’. Consequently, the number of non-‘culturally British’ films benefiting from the Scheme is expected to be very small.

Hammad Baig advises on all aspects of business rates, international trade law, tax law and commercial litigation.

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