Independent Film Finance – The Good, The Bad and The Worrying

Finance for independent films in the UK has received a huge boost courtesy of the new enhanced Audio Visual Expenditure Credit (AVEC) known as Independent Film Tax Credit (IFTC)

As has been widely reported, finance for independent films in the UK has received a huge boost courtesy of the new enhanced Audio Visual Expenditure Credit (AVEC) known as Independent Film Tax Credit (IFTC). For budgets up to £15m the IFTC will effectively give a cash rebate of 40% of 80% of Total Core Expenditure. Therefore, for a budget of say £5m the rebate amounts to £1,590,000 (i.e. 31.8%). The producer is then still able to commit the balance of the production’s budget of £1m to be spent in other territories and obtain further tax credits.

The introduction of IFTC will not only help UK producers making films in the UK but will attract co-productions from other territories.

However, it should be noted that picking up the balance for the rest of the production is no easy task. How do producers get finance over and above the tax credit? Well one way is to attend various Film Markets and pitch to financiers attending and with a desire to invest.

Our media team attended the Production Film Market organized by Film London last week. 40 Producers had meetings with 33 Film Financiers including Bankside Films, Lipsync, Universal Pictures , Head Gear and Creativity Capital. The range of funding from the financiers was extensive and included,

• Equity Finance for single pictures and slates
• Gap Financing
• State Financing
• minimum guarantee \ advances against rights
• tax funding
• representation of licence rights

Our advice is that producers need to be well prepared for their meeting with potential financiers. Before investing any money they will expect to see

• A well prepared pitch
• A script
• Budget
• Your proposed shooting schedule
• and if you have it, your preferred or committed cast and or director

In the case of cast it is a point of frustration that often to get finance you need talent that will help sell the film: and to get talent you need to show that you have secured the finance. How do you make that work, who’d be a producer?

It’s a sobering thought that film investment comes with inherent risk. An experienced producer at the Screen Summit commented that he currently had four films in development or production but suspected that at the end of the day only one, if he was lucky, would go into profit

However, our experience with our clients shows that there is money out there, but for the right product that fit the financier’s strategy. Once a production company manages to produce high calibre products the journey to obtain finance for the next product will be easier: but that is not to say it will be easy. It never is.

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