Film tax relief: A quick guide

Talk to just about anyone working in the film industry and they’ll tell you it’s a pretty expensive business. But even in these tough economic times, there’s still help available to innovative, professional film companies thanks to the UK government’s film tax relief incentive.

Film tax relief (FTR) can mean some serious extra cash for your business. Even the smallest of productions can benefit as there’s no minimum budget size.

What is film R&D tax relief?

The government launched film tax relief (also sometimes called film tax credits) back in April 2007. Since then it has acted as a huge driver for inward investment, bringing about a boom in British film production.

Film tax relief is one of a group of creative industry tax reliefs allowing eligible companies to claim an enhanced deduction for a range of production costs. Where an enhanced deduction can’t be applied, a payable tax credit courtesy of HMRC can be claimed instead.

How do film tax credits work?

Regardless of whether an independent or co-production was produced, companies need to demonstrate that filming will result in a British film that has passed the UK Film Tax Credit Cultural Test.

Once passed, eligible organisations will be issued with a certificate to show that they’re free to claim film tax relief. If the film still isn’t finished, an interim certificate will be given so the company can claim interim relief in the meantime. This can be a big help with cash flow.

Production companies looking to claim film tax relief must also be able to show that:

• The film is intended for UK public release
• A minimum of 10% of overall production costs relate to filming within the UK, and,
• The first official day of filming didn’t occur prior to the 1st January 2007.

How much is film R&D tax relief worth?

British film production companies can claim up to 25% on UK eligible expenditure. The relief is limited to 80% of the core expenditure. In other words, even if you have 100% UK-qualifying expenditure, tax relief will only be paid to a maximum of 80%.

No limit applies on the budget of the production or the amount of relief that can be claimed within the 80% cap.

How are British co-productions treated when it comes to film tax relief?

The UK has film co-production agreements with France, Canada, Australia, Morocco, China, India, Jamaica, Israel, South Africa, New Zealand and Occupied Palestinian Territories. Of these, Canada, Australia, Israel, New Zealand and the Occupied Palestinian Territories also allow for television programmes.

The UK is also a signatory to the European Convention on Cinematographic Co-production. These rules typically apply:

• A UK-based production company must be responsible for all UK elements of the production from start to finish
• Each country must have a co-producer, plus an application lodged in each country
• The decision will be made jointly by the authority in each country
• Corresponding production companies must exist in the other co-producing party countries
• The filmmaking contribution from each country will be in proportion to the finance from each country.

For more information on co-productions, please visit the BFI website.

How can my company claim film tax relief?

Once your company has received verification by passing the BFI cultural test, you can then proceed with a claim for film tax relief. On success, the amount due will be issued back to your company as a tax rebate.

Bear in mind that if you receive an interim certificate, you will need to submit an application for the full certificate at the point when the film has been completed. Final certificates must be sent to HMRC to receive your tax rebate. If you don’t provide a final certificate, you will then need to pay back any interim payments you’ve already had.

Why use Myriad Associates to apply for film tax relief?

Finding the time, knowledge and resources to complete your FTR claim is hard when there are so many other things to do in a day. It’s also not easy to understand exactly which costs can be included in a claim and which can’t.

This is why many UK film companies partner with R&D tax specialists like us.

With well over 10 years’ experience, our team will put together a fully optimised claim that gets your company the tax relief it’s owed. There’s nothing to pay up front either, as our FTR services are provided on a success fee-only basis.

From start to finish, we’ll handle your claim so that as little as possible of your own time is taken up. Not only will be identify all your eligible expenses so nothing is left on the table, we can also pick out ones that general accountants and in-house teams tend to miss.

Whether you’re ready to start your film tax relief claim or just want some advice, call us today on 0207 118 6045. You can also send us a message and we’ll call you right back.