Pinewood among UK studios battling huge property tax hikes – Deadline

EXCLUSIVE: Britain’s biggest film studios are preparing for tough talks with a government agency, fearing a so-called ‘studio tax’ could ‘torpedo’ the UK’s booming production industry.

Pinewood is part of an informal working group of UK studios who have worked with the British Film Commission (BFC) to avoid potentially huge property tax increases. Studio representatives are due to meet with the Valuation Office Agency (VOA) this week to outline their concerns.

The VOA has overhauled UK studio ‘rateable values’, an assessment of how much a property would rent if it were available on the open market. Assessed values ​​are used to calculate corporate rates, a tax on non-domestic properties. The higher the taxable value, the higher the activity rate.

Pinewood StudiosThe rateable value will quadruple from £3.95m to £16.2m ($19.7m) according to assessments to be introduced by the VOA in April. Warner Bros.. Leavesden Studios, home to The Batman and those of Netflix Youwill see its rateable value quintuple to £25.3million.

Smaller studios face similar hikes. Arborfield, where Netflix is the witcher was filmed, was set at a rateable value of £2.9million, more than seven times its current valuation. Twickenham Film Studios’ rateable value is set to quadruple to £1.75m.

The changes have appalled studio heads and developers, who believe it will be a spectacular target for the UK government, which has been scrambling to promote growth in a burgeoning £6.3billion production sector through tax relief and investment in skills.

There are fears that higher commercial rates will be passed on to producers, making the UK a less competitive place to set up film and TV projects. Industry insiders said higher property taxes would also threaten investments in new facilities at a time when studio space is scarce.

Some think rate hikes for businesses couldn’t come at a worse time, as studios grapple with sky-high energy costs. There are also fears that demand for studio space has peaked as streamers like Netflix manage spending amid sluggish subscriber growth.

Superna Sethi, co-CEO of Twickenham Film Studios, where Bohemian Rhapsody was filmed, said, “The VOA threw a grenade at the film industry. We’d go so far as to say it could spell the end for a number of the UK’s most historic independent film studios.

Barnaby Thompson, Partner at Ealing Studios, said the facility would have to reconsider plans to build a new 14,000-square-foot soundstage, if the studios failed to force an overhaul. house for darkest hour And Last night in SohoEaling Studios’ rateable value will more than double to £2.8million.

“The UK has done such a good job with its creative industries, why would you do anything to threaten the progress you’ve made?” said Thompson. “I hope this is a misunderstanding of how studios work and that once they start talking to people who know the business, they realize that the pricing calculations are inaccurate. .”

Nick Smith, Managing Director of Shinfield Studios, a Reading-based resort which opened the first of its 18 stages last year, said: ‘Putting in place a rate increase which then has to be passed on because the studios aren’t actually making as much money. money, will break for some companies and productions. I encourage the Evaluation Office to reconsider the rates. You might be able to double the rates of a UK studio, but how much production value are you going to lose? »

Ryan Dean, founder of RD studios in west London, agreed it was a “short-term” thinking. “Someone in a high-level position in government needs to look into this,” he said. “What is the point of having invested all this time, energy and money into something that works post-Brexit and torpedoes it?

It’s unclear how the VOA calculated the increases in assessed values, but there’s speculation among studio heads that this was based on the revenue major studios generate from long-term leases, like the Disney’s ten-year agreement with Pinewood. The majority of UK studios don’t have clients locked into similar deals. Instead, they license their sound stages on a production-by-production basis, which means they have fallow periods.

Pinewood, home of James Bond no time to die, and Warner Bros. Studios Leavesden is among the legacy studios that will have some protection against increases in assessed value, as their professional rates will be capped at 30%. It’s unclear, however, if Pinewood has a provision in its contract to pass on higher commercial rates to Disney, which means it may have to bear the cost. Pinewood and Warner Bros. declined to comment.

Studios that will be operational after March 31 this year will not be protected by the 30% cap, which could jeopardize construction projects. Two developers have joined the chorus of concern. Mark Quinn, who is behind the £250million Ashford International Studioswhich begins construction in Kent later this year, said the assessed values ​​are a ‘regressive move for investment in the UK film industry’.

Giles Dobson, partner at property consultancy Bidwells, which is developing Hertswood Studios in Hertfordshire, added: “Rising property taxes in the UK threaten to dethrone Britain’s position as a global hub for housing. entertainment industry… Huge mismatches between supply and demand have left multinational production giants vying for a limited space, so government should have the ambition to encourage the development of new studios, not discourage like could the new taxes.

The VOA released the assessed values ​​early to allow the film and television industry to make representations. It calculates assessments using methods approved by the Royal Institution of Chartered Surveyors.

A VOA spokeswoman said: “The new assessed value of a film or television studio will reflect the evolution of rental values ​​from 2015 to 2021. Since 2015, the growth of streaming services and the attractiveness of the production in the UK led to an increase in rental values. We engage with industry representatives on assessments.

BFC Chief Executive Adrian Wootton said: “Following the publication by the Agency of the Assessment Office of the draft Non-Domestic Tariff Reassessment List, the British Film Commission has been actively engaging with commercial, studio industry and government tariffs to work out the details and implications to support an outcome satisfactory to all parties.To this end, a meeting has now been convened between the VOA and the studio professional tariff representatives.

The studio tax issue comes as the government considers a wider overhaul of Britain’s film and TV tax credit system, causing greater concern in the industry. A consultation on filming incentives ended last week, with the government considering raising the threshold at which producers can claim tax relief beyond its current level of £1m per hour.

The BBC, ITV, Channel 4, Sky, Paramount and Netflix were among industry leaders who wrote to the government warning that raising the threshold would lead to fewer productions being hosted in the UK. They said it would put £1.3billion in tax revenue and 30,000 jobs at risk.