Written evidence submitted by Magic Dust Visual Effects Ltd

Re: Call for Evidence - British Film and High-End Television Written Evidence

I am responding to your enquiry as former management consultant, former Strategy Director at Warner Bros. UK, Spain and Ireland and as the current co-founder of a BIFA nominated, London-based visual effects company (Magic Dust Visual Effects Ltd).

I believe the UK is in decline as a global destination for the production of film and high-end television, with Canada and parts of North America offering more attractive incentives for film and television. As film and television become more reliant on visual effects and virtual production, which account for skills of the future, after conducting high level analyses of publicly available sources, it is alarming to see these aspects integral to film-making moving towards North America (Canada in particular) at a significant rate.

• Despite the global visual effects industry expected to grow over 8% p.a. for the next 10 years[1], an analysis of the UK Screen Sector Report 2021-2022 (BFI) from 2018-2019 the UK VFX and Animation industries have declined by -4%[2] p.a. and more so in real terms.
• The industry is clearly dependent on overseas investment though even what should be UK based films are seeking to move their post to other countries that offer better incentives e.g. the VFX on the recent instalment of the Bond franchise was mainly done out of Vancouver and Montreal[3] and 1917, which could be considered a British film, had most of their VFX done in Montreal according to the article referenced in the footnote below by Montreal International.
• As a result, despite being only around a fifth of the size of the UK’s total population (13.5m vs 67 million), British Columbia and Quebec’s spend on visual effects and animation is more than double that of the UK’s (£939m vs £428m with 7% growth pa from 2018-2019 compared to -4% p.a. for the UK in the same time period²
• This is having an impact on the UK’s VFX and animation workforce which has been in decline and is now estimated to be around a third of the size of the workforce in British Columbia and Quebec combined leading to a brain drain of talent out of the UK²

Graph: Spend on VFX and animation – UK vs Quebec and BC (see table below for sources) - £m

Analysis of key statistics – UK vs Quebec and Montreal

There are two main things that could be done to reverse this declining trend:

• Removing the 80% cap: numerous clients have expressed concerns about the existing cap on industry tax reliefs, as it often prompts them to seek post-production services, including VFX, elsewhere to benefit from more favourable tax incentives. From a producer's standpoint, this rationale is logical, as their decisions on filming locations and post-production hubs are significantly influenced by available tax benefits. A revision allowing producers to claim 100% of their budget would undoubtedly revolutionize the UK's post-production sector. This change would not only result in substantial increases in tax revenues but also foster indirect economic contributions, which a thriving post-production industry inherently brings to the UK economy. With the removal of the cap and to reduce burden on the BFI and HMRC, we would suggest only productions with a minimum spend of around £50,000 on VFX per film, animation or per TV episode should qualify for the removal of the 80% cap.
• Reconsidering the need for productions to meet the cultural test to have their post-production done in the UK: unlike Canada, which attracts a wider array of productions due to its absence of a cultural test, the UK should consider re-evaluating the necessity of this test for post-production activities. It remains unclear how the cultural test enhances the post-production sector or why it's tied to the cultural test's outcome for the rest of the film. Such a requirement seems to be an avoidable barrier when it comes to drawing overseas investments and retaining UK talent. To address the decline in the domestic post-production industry while upholding a British identity, a potential solution could involve offering additional incentives to productions that meet the cultural test, while still welcoming those that don't.

With the rise of artificial intelligence, inevitably driving film-making towards visual effects and virtual production it is vital that the Government acts promptly to update its stance on tax reliefs for film, TV, animation and VFX. The skills that a career in VFX develops hold great promise for the future and failure to take action now means the UK is at risk of losing valuable talent and experience, as well as significant tax revenues. Historically the UK has proudly lead the Creative Industries at a global level, and urgent action is required to protect our esteemed, global standing.

Please do not hesitate to contact me should you have any further questions or require assistance,

Best wishes

Suzie Boavida

Co-Founder and Head of Production – Magic Dust Visual Effects

Suzie.boavida@magicdustvfx.com