Which Productions Are Eligible for the IFTC?

The Independent Film Tax Credit (IFTC) offers qualifying UK films a credit rate of 53%, well above the 34% available through the standard Audio-Visual Expenditure Credit (AVEC). That higher rate only applies if your production meets a specific set of conditions on top of the usual film requirements.

This article sets out exactly which productions qualify, so you know where your film stands before you start planning your claim.

What is the IFTC?

The IFTC is an enhanced version of AVEC, built for lower-budget British films. Rather than being a separate scheme, it's a higher rate you can access if your production meets some extra criteria on top of the standard AVEC rules.

We've covered the full mechanics of the scheme, including how to calculate your claim, in our complete guide to the IFTC. This article focuses purely on eligibility: what your production needs to look like to qualify.

Does my production need to meet the standard AVEC criteria?

Yes. Every film claiming the IFTC must first meet the baseline requirements that apply to any AVEC claim. Regardless of budget or genre, your production must:

• Be made by a company registered for UK Corporation Tax (LLPs, partnerships and individuals can't claim)
• Be certified as British by the British Film Institute (BFI), or be a qualifying co-production
• Be intended for theatrical release, with your company expecting to earn at least 5% of its income through that cinema run
• Have at least 10% of its core costs relating to UK activities

Only one company can claim for a given production. This will be the company taking the most active role in planning, decision-making, negotiating contracts, and paying for goods and services. Holding the copyright while commissioning someone else to make the film isn't enough on its own.

Getting BFI certification means passing the Cultural Test, which needs a minimum of 18 points out of 35 on factors like content and creative heritage. We've written a full breakdown of how the test works in our guide to the BFI's Cultural Test.

What budget limit applies to the IFTC?

This is where the IFTC diverges from standard AVEC. To access the 53% rate, your film needs either:

• A total budget of up to £15 million, or
• Core costs of up to £23.5 million

The second threshold exists so productions just over the £15 million mark aren't unfairly shut out. These limits correspond to a cap on the total cash credit you can receive of £6.36 million, based on claiming the full £15 million of expenditure.

If your budget goes over £15 million, you have a choice. You can keep claiming IFTC at the higher rate up to the £6.36 million cap, or claim standard AVEC at 34% on the whole of your qualifying expenditure instead. Which one delivers more depends on exactly how far over the threshold you are, so it's worth modelling both before you commit.

For example, a company has £23.5 million in UK-based core costs and pays corporation tax at the main rate of 25%. The company claims IFTC on its core costs at 53%, but can only claim back £6.36 million, as it hits the cap. As the expenditure credit is taxed at 25%, the company receives a benefit of £4.77 million.

Under the AVEC scheme, this company would receive £4.79 million.

The IFTC is calculated in the same way as AVEC; you can read more about working out your claim’s value here in our guide: What Is the Audio-Visual Expenditure Credit Worth?

What is the Modified Creative Connection?

Beyond the budget test, the IFTC has one further condition: the "Modified Creative Connection." Your film needs one of the following:

• The director and/or scriptwriter is a British citizen or resident, or
• The film is an official British co-production

For most independent productions, a British director or writer is simply a fact of the project. However, you’ll still need to prove that to HMRC.

If your film isn't an official co-production, you'll need an Accountant's Report from a BFI-registered auditor confirming your director and/or scriptwriter's nationality or residency. That report typically costs a minimum of £3,000, and it's a requirement of the scheme rather than optional supporting evidence.

A production with a French director and a British scriptwriter can still meet the Modified Creative Connection through the scriptwriter alone, since only one of the two roles needs to be British. If neither were British, the production would need to qualify as an official co-production instead, or claim through AVEC.

We've covered how the Accountant's Report requirement interacts with the wider Cultural Test, and when it can be avoided altogether, in our comparison of IFTC versus standard AVEC.

When did the IFTC come into effect?

The IFTC only applies to productions where principal photography began on or after 1 April 2024. If your film started shooting before that date, it isn't eligible for the IFTC, regardless of budget or creative connection, though it may still qualify for standard AVEC.

Can I claim the IFTC alongside VFX or animation uplifts?

No. If you claim the IFTC, you can't make separate claims for the visual effects or animation uplifts, which would otherwise raise the rate on those specific costs to 39%. Ultimately, the IFTC is worth more than those uplifts, so it’s usually a moot point.

Which productions are not eligible for the IFTC?

A few categories of production fall outside the IFTC entirely:

• Television programmes. The IFTC is a film-specific credit. High-end TV, children's TV and TV animation can access AVEC, including the higher 39% rate for children's and animated content, but not the IFTC.
• Films not intended for theatrical release. Straight-to-streaming or straight-to-broadcast productions don't meet the baseline AVEC criteria, so they can't reach the IFTC either.
• Films that fail the BFI Cultural Test. Without British certification (or qualifying co-production status), a film can't claim any part of AVEC or the IFTC.
• Productions where photography began before 1 April 2024. These may still qualify for standard AVEC, but not the enhanced rate.
• Films with core costs above £23.5 million. These productions must claim through standard AVEC at 34% (or 39% for animation).

Key takeaways

• The IFTC pays 53% to qualifying films, against 34% for standard AVEC, but every IFTC claim must also meet the baseline AVEC criteria: British certification, theatrical release, and at least 10% UK core costs.
• Budget limits are generous but not unlimited. Films need a total budget up to £15 million or core costs up to £23.5 million, with claims capped at £6.36 million.
• The Modified Creative Connection is non-negotiable. You need a British director and/or scriptwriter, or official co-production status, and proving it usually means an Accountant's Report costing at least £3,000.
• The IFTC is film-only. TV productions of any kind, including children's TV and animation, claim through AVEC instead.

If you're unsure whether your production meets these criteria, or want help working through the Cultural Test and Modified Creative Connection requirements, don't leave it to chance. Contact us to talk through your specific production.