UK Film Tax Relief Explained

What is UK Film Tax Relief?

• UK Film Tax Relief (FTR)is available for all British qualifying films of any budget level; the film production company can claim a payable cash rebate of up to 25% of UK qualifying expenditure.
• The Tax Relief is capped at 80% of core expenditure  i.e. even if you spend 100% qualifying expenditure in the UK, tax relief is payable on up to 80%.
• There is no budget limit.

How do I access UK Film Tax Relief?

• Tax relief is available for British qualifying films.
• Films must either pass the Cultural Test or qualify as an official co-production
• Films must be intended for theatrical release
• Films, including those made under official co-production treaties must reach a minimum UK spend requirement of 10%. The UK currently has eleven active bi lateral treaties. http://www.bfi.org.uk/film-industry/british-certification-tax-relief/co-production
• Tax relief is available on qualifying UK production expenditure on the lower of either 80% of total core expenditure or the actual UK core expenditure incurred
• There is no cap on the amount which can be claimed

Film Production Companies

UK Film Tax Relief is available to the FPC responsible for the film on the condition that it falls within the UK corporation tax net.

The FPC is defined as the company responsible for the principal photography and post production of the film and for the completion of the finished film. (There is no requirement for the film rights to be owned by the FPC at the time the film is completed).

What is the minimum UK spend?

A minimum of 10% of costs must be spent on UK qualifying production expenditure.

What qualifies as expenditure?

UK qualifying production expenditure is defined as expenditure incurred on filming activities (pre-production, principal photography and post production) which take place within the UK, irrespective of the nationality of the persons carrying out the activity.

HM Revenue & Customs’ (HMRC) definition of UK spend introduces the concept of where a good or service is “used or consumed” in the UK. If they are used or consumed in the UK, the expenditure is treated as UK expenditure (under the rules set out in the clauses of the Finance Bill). If they are used or consumed outside the UK, they do not count as UK expenditure.

The Cultural Test

Qualifying a film as British can enable producers to access the UK’s film tax relief. The Cultural Test can also be applied to qualify high-end television programmes, animation, children’s programmes and video games as British and to access the UK’s creative sector tax reliefs.

If you are unsure about the amount of tax credit that may be on a production, we would be happy to provide you with our opinion.

For more information please contact Ian Gibbon or David Gibbs on +44 (0)207 240 9971.

About Alliotts

Alliotts Media team currently handle around a 15% share of the market for obtaining film tax credit refunds for independent productions with budgets up to £20m. We’ve been working with the film industry since the 1960s, so we’re not newcomers, we’ve built up an impressive catalogue of experience. Our clients have included cult niche productions to international Oscar winning films.