10 Years After ‘Star Wars,’ the UK Is Winning as Hollywood’s Global Production Hub

In 2014, J.J. Abrams and his team began filming “Star Wars: The Force Awakens” at Pinewood Studios in London, launching the Disney era of George Lucas’ galactic franchise.

That $2 billion box office hit also marked the launch of a new era for Great Britain’s film industry. In the decade since, the United Kingdom has made a sustained push to reestablish itself as one of the premier production hubs in the world, with the annual box office top 10 replete with films shot there, year in and year out. “Barbie,” “Wicked,” and “Sonic the Hedgehog 3” are just a few of the recent hits to film there.

And this March, Marvel Studios will shoot the upcoming “Avengers: Doomsday” in England, marking the return of the MCU’s “Avengers” series to Britain for the first time since “Avengers: Age of Ultron” a decade ago. The intervening installments, “Infinity War” and “Endgame,” were filmed at Trilith Studios in Atlanta.

The U.K.’s strong position is the result of nearly two decades of public and private investment in support for all levels of the film industry. And Britain’s surge as a global production hub comes as Los Angeles, the traditional base for the entertainment industry, has struggled to incentivize studios to keep productions at home.

The U.K. is taking more and more of Hollywood’s business. And studio insiders and industry experts tell TheWrap that the push to film more there is not ending anytime soon because the U.K.’s advantages extend well beyond just tax percentages, which can be nearly 10% higher than what California provides. Unlike California — or anywhere else in the world — the U.K. offers back-end deals for actors and directors on a film’s box-office performance that count towards the credit, meaning that a studio could get tax credits for a production years after its initial release. 

“If it was just the tax credits, I don’t think the U.K. would be where it is now — there are other parts of the world that offer generous packages,” said Daniel Benge, a partner at Fox Rothschild who specializes as a production consultant. “There is a systemic level of support in Britain for the arts on both the public and private sides, and that has led to a wide network of resources that studios and indie producers can utilize if they film there.” 

Parliament approved the U.K.’s production-incentive program at a time when the country’s historic film studios like Ealing and Pinewood were seeing fewer and fewer productions over the course of the 1990s and early 2000s, save for a few notable exceptions, like Warner Bros.’ “Harry Potter” films that set up shop at Leavesden outside London. 

While the U.K. has always been a go-to destination for some Hollywood productions, including the James Bond franchise, the turning point for the market’s recent dominance came in 2013, when the U.K. government decided it would not cede “Star Wars” to other global competitors.

George Lucas filmed much of the original trilogy at Elstree Studios but moved the production of his prequel trilogy to Australia after “Star Wars: The Phantom Menace,” dealing a blow to the U.K. But when Disney announced its historic acquisition of Lucasfilm in 2012 for $4.05 billion, and with it plans to develop a new “Star Wars” trilogy, George Osborne, Chancellor of the Exchequer under PM David Cameron, sought to bring “Star Wars” back to England. In 2013, Osborne convinced Disney CEO Bob Iger and J.J. Abrams to film the majority of “The Force Awakens” at Pinewood Studios.

That film reportedly received more than £72 million in tax credits from the U.K. government, and Disney went on to not only film the rest of the sequel trilogy at Pinewood, but many of the “Star Wars” streaming shows and the spinoff films “Rogue One” and “Solo.” The studio also secured occupancy rights to most of the complex in a 2019 deal that is set to last through at least 2029. 

The program paid out 110 claims in its first financial year, totalling about £100 million in tax credits, according to a 2014 paper from HM Revenue & Customs. By 2012, that total had increased £220 million from 390 claims. And between 2007 and 2022, the U.K. government paid out £4.8 billion in tax relief. 

Amid the rising interest in the U.K., Warner Bros. purchased Leavesden Studios, the longtime production center for the “Potter” films, in 2010.

Since then, the list of Hollywood films Warner Bros. produced at WB Leavesden includes “The Batman,” “Barbie,” “Fantastic Beasts: The Secrets of Dumbledore,” “Venom: The Last Dance,” and “Beetlejuice Beetlejuice.” The studio will also be the production home for HBO’s upcoming “Harry Potter” TV series.

As the U.K. made this push, major hubs in the United States didn’t stand idle. Georgia built up a world-class production center of its own through a generous tax incentive package that is the only one in the U.S. to not have an annual cap. California, meanwhile, significantly revised its tax credit program in 2014 to encourage TV producers to keep the prestige dramas that were heading to other countries in the Golden State. 

But while that California tax credit went largely unchanged in the decade that followed, the U.K. kept pressing its advantage. 

U.K. studios expand

To open itself up to more business beyond Disney, Pinewood Group, which owns the famous Pinewood and Shepperton Studios in the UK, is now in the midst of an expansion after its owner, Aermont Capital, transferred ownership to a new corporate vehicle backed by a mix of private and public investors.

It wouldn’t be the only deal made between Hollywood and London. Starting in 2019, Netflix set up its own production hub at Shepperton Studios, expanding its occupancy as the soundstage facility grew in the years following the pandemic — it’s where the streamer’s wildly popular “Bridgerton” is shot. The expansion also allowed Amazon MGM Studios to move into Shepperton last year. Not wanting to be left behind, Universal made its own long-term deal with Sky Studios in Elstree, where Jon M. Chu shot his two-part adaptation of “Wicked” in 2023.

With these deals in play, the U.K. has pressed its advantage by making further improvements to its tax credit package with the passage of the Audio-Visual Expenditure Credit (AVEC) last year. Up to 80% of a film’s total budget can count towards the program, which offers a net credit after tax of 25.5%. That package was further enhanced last fall with even stronger incentives for productions that do key post-production work such as visual effects in the U.K., increasing the net credit to 29.25% on VFX costs. 

By comparison, California’s film and tax credit program offers a maximum percentage of 20% for most feature films and TV series.

Lower labor costs have also given the U.K. an edge

Britain is attractive to Hollywood for more than just tax credits. Filming in London offers savings in other areas, particularly in labor costs, studio insiders told TheWrap. 

One studio executive who spoke to TheWrap on condition of anonymity said that per IATSE’s Hollywood Basic Agreement and Area Standards Agreement, below-the-line workers in U.S. shooting hubs are entitled to fringe benefits such as covered hotel/transportation costs, per diem rates and living allowances for nearby hires that greatly exceed those of British below-the-line film crews. The executive estimated that fringe costs amount to a 46% increase on every dollar spent on crew labor for U.S. productions, compared to 14% for those shot in Britain. 

“We had one production that was filmed about equally in London and in Georgia, and after it wrapped we compared the costs,” the executive said. “The labor cost difference was about $20 million by itself.”

Beyond the dollars and cents, the executive said that because Britain’s film industry is directly supported by the national government, there is a level of support for productions that U.S. hubs, which are largely overseen on a state level, cannot match. The U.K. also has local and regional film commissions for constituent countries like Wales, Northern Ireland and Scotland, but the involvement of the federally supported British Film Commission provides another layer of support. 

“If you want to close down a street in London, you’re dealing with the federal government there; whereas in the U.S. you may go to a local office for permitting or maybe a state-run office. That national level of support does make filming easier,” the executive said.

In an effort to claw back some of the productions lost to London and other parts of the world, California is expected to significantly raise the cap of its tax credit program from $330 million to $750 million and expand the types of productions that can qualify as part of the Sacramento budgetary process this year. 

In the aftermath of the Los Angeles wildfires, local entertainment workers have also organized the “Stay in L.A.” campaign to push Sacramento to go even further, calling on the legislature to completely remove the cap for the tax credit program for three years to encourage job growth. The campaign is also calling on local officials to reduce permit costs and for state and federal legislators to assist in reducing insurance costs for productions.

However the upcoming aid to Hollywood production takes form, studio insiders told TheWrap that they are cautiously optimistic that such an expansion can stem the flow of productions overseas, depending on how generous the increases are to the program.

But while they expect the number of TV productions and lower-budget studio films shot in the Golden State to increase, they don’t see Hollywood pulling the tentpole films that they’ve spent millions to move to Britain back to Los Angeles unless salaries for top talent like actors and directors are included towards the California tax credit, something that might be a hard sell for state legislators.

“When it comes to above-the-line spending, it’s not just U.K. versus California. It’s California versus Georgia and Australia and many other places,” the executive said. “If your above-the-line spend is $60 million, I don’t think anybody’s going to say, ‘You know what, we’ll just forgo the $20 million of tax credit, and pay more to be here in LA.’”

Unless, of course, a filmmaker with enough clout demands it. A top executive at Disney said that with its increased occupancy at Pinewood, the studio is looking to move more of its live-action production – Lucasfilm, Marvel Studios and otherwise – over to the U.K. It is why nearly all of Lucasfilm’s output under Disney in both theatrical and streaming has been done there. 

The one notable exception is Disney’s first “Star Wars” streaming series, “The Mandalorian,” which was shot using Lucasfilm’s state-of-the-art StageCraft digital set at Manhattan Beach Studios. The series, along with its upcoming feature film installment “The Mandalorian & Grogu,” was filmed in L.A. specifically at the request of series creator Jon Favreau, who wanted production of what has become one of the most popular titles of the Disney “Star Wars” era to support an Angeleno film industry that is facing an increasingly dire future. 

Additional reporting from Richard Smirke in London and Alexei Barrionuevo in Los Angeles.

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