EXCLUSIVE: British film and TV studios have been hit by potentially existential increases in property tax bills, as industry representatives continue to plead their case with a government agency.
The Valuation Office Agency (VOA) officially introduced a so-called “studio tax” from the start of the month, which some independent facilities have argued could force them out of business.
The VOA has updated UK studios’ “rateable values,” an assessment of the annual amount a property would rent for if it were available on the open market.
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Rateable values are used to calculate business rates, a tax on non-domestic properties. The higher the rateable value, the higher the business rate tax.
Pinewood Studios, where James Bond is filmed, has had its rateable value raised fourfold to £16.2M ($20.2M) on April 1. Warner Bros. Studios Leavesden, home to Mission: Impossible – Dead Reckoning, has seen its rateable value rocket fivefold to £25.3M.
Independent facilities have also endured similar hikes. Ealing Studios’ rateable value has doubled to £2.8M, while Twickenham Film Studios has had its rate quadrupled to £1.75M.
Superna Sethi, Joint Managing Director of Twickenham, told Deadline in February that the increases could be the “death knell” for some studios.
This is despite legacy studios like Twickenham receiving some protection from rateable value hikes because their business rates will be capped at 30%. Studios operational after March 31 will not benefit from this protection.
The VOA told Deadline this week that it would “continue to be engaged with the sector” and that it expects representatives for studios to present “additional data” in the near future. The VOA has also been carrying out studio inspections.
Industry sources said there had not been a breakthrough in talks with the VOA, but there remains hope that the worst of the rate increases can be reversed.
Studios chiefs are perplexed by how the VOA has calculated the huge increases in rateable values. There is speculation that it was based on the revenue big studios are generating from long-term leases, such as Disney’s decade-long deal with Pinewood.
There is concern that higher rates will have to be passed on to producers, making the UK a less competitive location to set up film and TV projects. Industry insiders said higher property taxes would also threaten investment in new facilities at a time when studio space is at a premium.
The changes only apply to studios in England and Wales, meaning facilities in Scotland and Northern Ireland are unaffected.
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