Chancellor of the Exchequer Gordon Brown said March 16 that the United Kingdom's section 48 movie production tax relief will be extended through the end of March 2006.

LONDON (The Hollywood Reporter) -- Chancellor of the Exchequer Gordon Brown said March 16 that the United Kingdom's section 48 movie production tax relief will be extended through the end of March 2006.

Brown referenced film tax breaks for the second year in a row in his main budget speech, which he delivered to a packed House of Commons.

"To ensure direct help for British filmmakers, we will replace existing reliefs with new tax reliefs for both low-budget and larger-budget films," Brown said.

The treasury department later issued further details of the government's tax plans for movies, which include the extension of the country's low-budget film incentive covered by section 48.

The government also has pledged to replace the country's big-budget movie tax incentive, section 42, with "a structure similar to the new tax relief model that has previously been proposed for low-budget films."

The treasury said it plans to undertake an intense period of consultation with British film industry representatives to come up with suitable replacements for both tax incentives.

Government-backed industry body the U.K. Film Council welcomed Brown's pledge to extend tax relief for low-budget movies for another year. It means any film commencing principal photography before April 1, 2006 -- and completed by Jan. 1, 2007 -- will be eligible for the relief.

Discussions between all sectors of the film industry and the government will continue, and the transition from the current to the new film tax reliefs will then go into effect next year, subject to state aid clearance, the treasury said.

Several industry sources point out that Brown's move is a short-term fix to allow the government breathing space before its next general election -- widely tipped by pundits and political experts to take place in May -- to come up with replacement legislation.