Specialist R&D Tax & Grant Funding Advisors
Welcome to our blog on film tax relief, where we take a closer look at the financial incentives available for UK film productions.
Film tax relief is designed to support and encourage filmmaking in the UK, and we're here to help you understand how to save money on your next film production using this valuable resource.
The film industry is a significant contributor to the UK economy, generating billions of pounds in revenue and supporting thousands of jobs in the process. Film tax relief plays a crucial role in keeping this industry thriving, providing financial support to qualifying film productions and boosting employment opportunities.
So, how does film tax relief work, and what are the benefits of using it? In this blog, we'll break down the eligibility criteria, explain the types of relief available, and provide guidance on how to make successful claims. We'll also explore successful case studies and examine some of the challenges and criticisms of the scheme.
With our vast knowledge and expertise on the topic, we believe we can guide you through the complexities of film tax relief and help you take advantage of this valuable resource. Whether you're a seasoned pro in the film industry or a newcomer trying to navigate the landscape, our blog is packed with insights, tips, and best practices to help you save money on your film production.
Film tax relief is an economic incentive provided by the UK government that aims to encourage and support film production in the country. The purpose of film tax relief is to stimulate economic growth in the film industry, generate employment opportunities, and incentivise foreign investments in the UK. It is a crucial tool that reinforces the UK's position in the global film market and demonstrates the country's commitment to creative industries.
To claim film tax relief in the UK, production companies must meet specific eligibility criteria. These include spending a significant portion of their budget on UK-based expenditures, employing UK personnel, and meeting cultural content requirements. The cultural content requirements aim to ensure that the produced films represent the UK's diverse culture and heritage.
To claim film tax relief, producers must submit an application to the British Film Institute (BFI), with details and documentation about the film's budget, cultural content, and economic impact. Following guidelines and maintaining accurate records are essential for successful claims.
Film Production Companies can claim up to 20% of the core production costs of the film. FPCs can claim FTR on the lower of:
If the company is profitable, the tax relief can be used to reduce a Corporation Tax bill. Loss-making claimants can receive a cash payment from HMRC at a rate of 25%.
Following a public consultation, the film, TV and video games tax reliefs will be reformed, becoming expenditure credits instead of additional deductions from 1 April 2024. The new Audio-Visual Expenditure Credit will replace the current film, high-end TV, animation and children’s TV tax reliefs.
Film and high-end TV will be eligible for a credit rate of 34% and animation and children’s TV will be eligible for a rate of 39%. The expenditure threshold for high-end TV will remain at £1 million per hour.
The new Video Games Expenditure Credit will have a credit rate of 34%. Qualifying expenditure for the Video Games Expenditure Credit will be expenditure on goods and services that are used or consumed in the UK. Games that have not concluded development on 1 April 2025 may continue to claim EEA expenditure under the current video games tax relief until this relief sunsets in April 2027.
Film tax relief is an essential financial incentive that supports the development of the UK film industry. Eligible productions can benefit from the scheme, which aims to promote economic growth, employment opportunities, and foreign investments in the UK. Understanding the eligibility criteria and application process is crucial for producers looking to take advantage of these opportunities.
Film tax relief offers numerous benefits to the UK film industry.
Firstly, it encourages film production in the UK by providing financial incentives for qualifying productions. This, in turn, stimulates economic growth, creates jobs, and boosts revenue for the country. Productions that benefit from film tax relief can allocate those savings towards improving the quality of their films and creating compelling content. As a result, the UK has become an attractive destination for domestic and international filmmakers alike.
Secondly, film tax relief boosts local employment and talent development. To qualify for the relief, productions must employ UK personnel, which creates job opportunities for local residents. This helps to support and grow the film industry's talent pool and skills base, enabling individuals to develop their careers further. Furthermore, as more productions are made in the UK, there is a greater demand for local services such as catering, transportation, and accommodation, which further stimulates local employment and growth.
Thirdly, film tax relief attracts foreign investment and international productions to the UK. The availability of tax incentives and a talented workforce in the UK make it an attractive destination for foreign investors. This attracts international productions to the UK, creating new business opportunities for local companies and suppliers, which helps to support economic growth.
Finally, film tax relief strengthens the UK film industry's global competitiveness. By providing financial incentives and supporting domestic productions, it enables the industry to compete more successfully on a global scale. This allows UK filmmakers to create high-quality productions whilst keeping costs competitive, resulting in a highly respected and successful film industry.
Overall, film tax relief provides numerous benefits to the UK film industry, including encouraging film production, boosting local employment and talent development, attracting foreign investment and international productions, and strengthening global competitiveness. Its continued support has been instrumental in the growth of the UK film industry, making it an essential component of the country's creative economy.
The history and evolution of the UK Film Tax Relief Scheme dates back to the early 1990s, when tax incentives were first introduced to support British film production. The current scheme, introduced in 2007, builds on previous initiatives and offers increased financial support and clearer eligibility criteria.
The key features and components of the scheme include a generous payable tax credit of up to 25% of eligible production costs, which can be applied against UK tax liabilities. This credit is available to qualifying British productions, co-productions, and international productions with significant British cultural content.
Qualifying films under the scheme are broadly classified into British films, co-productions, and official treaty co-productions. British films are those that pass the Britishness test, which is based on factors such as the subject matter, location, and cast. Co-productions are films made in collaboration with producers from other countries, while official treaty co-productions are those made under specific bilateral treaties.
The UK has film co-production agreements with Australia, Canada, China, France, India, Israel, Jamaica, Morocco, New Zealand, Occupied Palestinian Territories, and South Africa. Of these, Australia, Canada, New Zealand, Israel and the Occupied Palestinian Territories also allow for television programmes.
For more information on co-productions, please visit the BFI website.
Other categories of qualifying films under the scheme include films that promote British culture, heritage, and diversity, and those that meet the requirements of the cultural test. The cultural test is a points-based system that rates films on various criteria such as workforce, locations, languages, cultural references, and the contribution to British culture.
The benefits of the UK Film Tax Relief Scheme are far-reaching and contribute significantly to the growth and competitiveness of the British film industry. The scheme promotes creativity, encourages talent development, generates employment and revenue, and strengthens the UK's position in the global film market. With continued support and responsible management, the future prospects of the scheme look promising and ensure that the British film industry remains vibrant and successful for years to come.
Claiming film tax relief requires careful attention to detail and adherence to specific guidelines. Production companies must follow a step-by-step process, provide the correct documentation and meet eligibility requirements to make a successful claim.
1) Determine eligibility - Identify whether the film meets the cultural test and expenditure thresholds required for Film Tax Relief. A film tax relief specialist, can help with determining eligibility and most will do so free of charge.
2) Submit registration form - Complete the registration form on the HM Revenue & Customs (HMRC) website and provide all necessary details about the production.
3) Supply documentation - Provide all necessary documents, including the script, budget, shooting schedule, and proof of cultural content.
4) Complete a detailed schedule of production - Detail all production activities and provide supporting evidence of these activities.
5) Calculate project costs - Calculate all eligible production costs and ensure they are in line with HMRC guidelines.
6) Submit claim form - Once production has concluded, submit a claim form within twelve months of the end of the accounting period of the relevant film production.
To make a successful claim for film tax relief, production companies must provide supporting documentation, including:
Production companies are responsible for submitting applications and managing the claims process. Co-productions and partnerships must have detailed agreements in place regarding the production's ownership, distribution, and expenditure.
In summary, claiming film tax relief requires careful attention to detail, adherence to guidelines, and accurate reporting. However, the benefits that film tax relief provides to the UK film industry and economy makes the process worth the effort. By working together, production companies can ensure that their films qualify for financial support and contribute to the growth and sustainability of the UK film industry.
Several notable films that have benefited from film tax relief in the UK include "The King's Speech," "Gravity," and "The Theory of Everything." These films represent different genres and different budget ranges, showcasing the versatility and effectiveness of the tax relief scheme.
"The King's Speech," a historical drama that won four Academy Awards, including Best Picture, received film tax relief. The film employed over 400 British crew members and used several UK locations, contributing to local economies. The tax relief helped to offset production costs and allowed the film to be completed within budget.
Reflecting its significant expenditure on UK crew, locations, and services. "Gravity," an Oscar-winning thriller set in space, was asupported by film tax relief. The tax relief helped to offset the film's high production costs and allowed the project to move forward.
"The Theory of Everything" a biographical drama about physicist Stephen Hawking, also received film tax relief. The film employed over 600 UK crew members and used several UK locations, contributing to the country's film industry and economy. The tax relief supported the film's production costs and allowed it to achieve critical and commercial success.
These examples demonstrate the impact of film tax relief in supporting the UK film industry, promoting employment, and attracting international investment. The financial incentive allows productions to allocate budgets more effectively, hire local talent and services, and compete more effectively in a global market.
The UK film tax relief scheme supports a range of genres and budget ranges, from small independent productions to large-scale blockbusters. By incentivising film production in the UK, the tax relief scheme contributes to the country's cultural and economic development.
While film tax relief is undoubtedly a valuable resource for the UK film industry, concerns have arisen about the potential for abuse and fairness of the system. One of the main areas of concern is the possibility of using the tax relief for purposes other than its intended use or exploiting potential loopholes in the eligibility criteria.
The cultural test, which assesses the cultural criteria of the film, has faced scrutiny for being too lenient and not promoting diverse representation. Some argue that this laxity means that films that do not promote British culture end up benefiting from the relief while films that authentically represent local culture and language miss out. Some filmmakers have questioned the effectiveness of the cultural test in promoting UK culture.
Another criticism of the film tax relief system is that it is not proportionate, with large-budget Hollywood productions benefiting from the same scheme as UK independent productions. This affords some companies a more prominent competitive advantage and places smaller production companies at a disadvantage. Concerns over fairness have led to calls for a more targeted approach to stimulating the UK film industry.
Balancing public interest and industry support is also a key challenge. Given that film tax relief is a taxpayer-funded resource, there is a need to ensure that public interest is not compromised in any way. It is essential to have proper transparency and accountability mechanisms in place to prevent misuse of the system.
To address these concerns, the British Film Institute (BFI) has continuously refined and updated guidelines for film tax relief and has developed measures to tackle potential abuse. The BFI has also engaged in dialogue with industry stakeholders to ensure that the scheme remains effective and benefits independent and large-scale film productions equitably.
Film tax relief is a powerful tool for promoting creativity, economic growth, and the UK's position in the global film market. Addressing criticisms and challenges such as potential abuse, fairness and proportionality, and public interest is necessary for ensuring that the industry benefits from the scheme sustainably.
While the UK Film Tax Relief Scheme is a recognised leader in supporting film production, many other countries have introduced their own film tax incentive programs. In Canada, the federal government offers a combination of tax credits and grants to eligible film productions, while in Australia, the Screen Production Incentive offers a cash rebate and tax offsets.
Similarly, the United States offers a range of film tax credit programs at the state level, such as the Georgia Entertainment Industry Investment Act and the California Film and Television Tax Credit Program. More recently, France has introduced its own tax credit program, the Tax Rebate for International Production (TRIP), which offers up to 30% of eligible expenses for qualifying international productions.
While there are similarities between these programs and the UK Film Tax Relief Scheme, there are also key differences. For example, some countries offer more generous incentives than others, with some providing cash rebates, while others are based on tax credits. Additionally, eligibility criteria may vary, with some countries prioritising local talent and cultural content, while others prioritise economic impact and job creation.
One potential lesson from international examples is the importance of promoting collaboration and co-productions. Some programs offer incentives for international co-productions, which can help foster partnerships and expand the global reach of film productions.
Another lesson is the importance of continuous review and refinement of incentives to ensure transparency and prevent potential abuse. The UK has already made changes to its Film Tax Relief Scheme over the years, such as the updates from the Spring budget and could continue to learn from international examples to strengthen its program.
In conclusion, while the UK Film Tax Relief Scheme is a key player in supporting film production, there are valuable insights and lessons to be gained from examining film tax incentive programs in other countries. By promoting collaboration, refining eligibility criteria, and maintaining transparency, film tax incentives can continue to support the growth and success of the global film industry.
The benefits of film tax relief are numerous and diverse. It supports creativity, employment, talent development, and the UK economy as a whole. It attracts foreign investment, provides opportunities for small businesses, and strengthens the UK's global competitiveness. However, there are also challenges and criticisms relating to potential abuse and fairness of the system. The UK government continues to review and refine guidelines to address these issues, ensuring transparency and responsibility.
The importance of film tax relief in the UK cannot be overstated. With the rise of streaming platforms and changing audience preferences, the film and television industry face an uncertain future. However, the Film Tax Relief Scheme remains a reliable and effective support system for production companies in the UK. While challenges and criticisms are inevitable in any system, the benefits of film tax relief far outweigh its shortcomings.
In conclusion, the future of film tax relief in the UK remains strong and promising. Recent developments show that the scheme is continuously evolving to meet the changing needs of the film industry. The impact of Brexit remains uncertain, but given the government's determination to foster a culture of creativity and support for the UK film industry, it is clear that film tax relief will continue to play a vital role in the country's economic and cultural growth.
Film tax relief is one of the UK government’s most generous tax reliefs, but making a claim isn’t always easy. Film tax advisers will handle your claim on your behalf from start to finish, meaning your time can be better spent elsewhere.
At Myriad Associates, our experienced team can identify all of your eligible projects and expenses so nothing is left behind. This means we can maximise your claim far more effectively than many in-house teams and general accountants.
Don’t forget to take a look at our film tax relief webpage for more information. If you think your company qualifies for film tax relief or you’d simply like to ask a question, feel free to get in touch with our experts.
You can call us on 0207 118 6045 or drop us a message and we'll call you back.
References and Further Reading:
"UK Film Tax Relief Cultural Test for Film." British Film Institute, https://www.bfi.org.uk/apply-british-certification-tax-relief/cultural-test-film
"Claiming Film Tax Relief for Corporation Tax " GOV.UK: https://www.gov.uk/guidance/claiming-film-tax-relief-for-corporation-tax
"British certification and tax relief FAQ" British Film Institute: https://www.bfi.org.uk/about-bfi/help-faq/tax-relief-certification
"Plan Your Production: Film Tax Relief " British Film Institute: https://britishfilmcommission.org.uk/plan-your-production/tax-reliefs/
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