Television and film studios are facing big increases in property taxes, raising concerns that the UK’s position as a global hub for the entertainment industry risks being undermined unless the authorities reconsider.
Several prestigious production facilities, including Shepperton Studios and Warner Brothers Studios Leavesden, are being threatened with some of the largest rises in business rates of any type of property after tax officials reassessed the value of commercial sites across England and Wales.
Large studios are braced for rises in their annual business rates from April of 30 per cent, the maximum increase because the levy is capped. Surveyors warned that the studios also faced increases of a similar magnitude for successive years.
Government records show that Pinewood Studios has been hit with a fourfold increase in its “rateable value”, which is used to determine business rates, while Shepperton and the Warner Brothers site have been hit with a fivefold rise.
Rateable values are the government Valuation Office Agency’s assessment of the annual rent an occupier would pay for a property if it was let on the open market. The government then applies a multiplier, typically linked to inflation, to the rateable value to calculate business rates.
The surveyors warned that if the increases are enacted, the biggest threat would be to new studio developments, which would not benefit from the business rate cap, and that overseas investors in particular would reassess whether to press ahead with construction.
Film and TV executives contend that the VOA has miscalculated the figures in its “draft list”, which can be subject to change before the tax increases take effect from April.
The threat of sharply higher property tax bills comes at a delicate time for the UK’s film and TV sector. Studios have flourished thanks to the rise of streaming, but households are now cutting back on subscriptions and content providers such as Netflix are seeking tighter cost of controls.
The industry wants the VOA to adopt a more lenient approach to valuations or for the Department for Digital, Culture, Media and Sport to intervene.
“We would be concerned about the impact if these were enacted,” said Adrian Wootton, chief executive of the British Film Commission. However, he added the industry was having a “very open discussion” with the VOA and the DCMS was supportive of the studios’ case.
Chris Berry, director and studios specialist at surveyors Lambert Smith Hampton, said: “My understanding is that they [the VOA] have shown an understanding of the issue and a willingness to engage.
“However, clearly an unanticipated tax increase of this magnitude has significant implications for the industry.”
Berry added that if enacted the increases would “impact on the desperately needed film studio development pipeline we have worked hard to promote” and could threaten “the UK’s competitiveness against other global production hubs”.
Every site is valued differently. As it stands the total combined rateable value for film and TV studios is set to more than double, the biggest overall rise of any type of property classification, according to calculations by consultancy Altus.
Property professionals said there was less comparable data for TV and film studios than for more mainstream types of real estate such as retail and offices, making them hard to value.
Demand for space to film has risen since the last time UK commercial properties were revalued for business rates six years ago.
The country has become a favoured location for global media groups, encouraged by tax breaks on productions. The largest and best equipped studios are in particularly short supply.
“The growth in streaming services and attractiveness of producing in the UK has led to an increase in rental values,” the VOA said. DCMS declined to comment.
Land occupied by such facilities is sought after by ecommerce retailers and logistics groups, further inflating asset prices.
But Robert Hayton, UK president of Altus, said “it’s hard to see what the justification is” for such big increases in the studios’ rateable values.
Wootton said: “There’s a recognition that [the industry] is doing incredibly well — nobody wants to in any way constrain that and put costs up that the industry can’t accommodate.”
The VOA added: “We encourage all ratepayers to check their valuation and let us know if any information we hold about their property is incorrect.”