Film Tax Relief

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You’re probably here because you are part of a film production company and want to know all about Film Tax Relief. FTR should be considered a must for producers working in the United Kingdom. Certain hurdles must be jumped over to ensure that you receive the funding, but they are achievable if you know what you’re dealing with.

In this article, we’ll explain the basics of FTR and answer all your important questions regarding the scheme.

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What is Film Tax Relief (FTR)?

Film Tax Relief is an incentive the UK government offers to Film Production Companies. The FPC responsible for the film must be within the UK corporation tax net, as the FTR process enhances expenditure incurred during film development to create an additional deduction against profits or to create a loss to receive a payable cash rebate.

This incentive allows UK film companies of any budget level to claim a rebate on financial expenditure used during several production phases. 

Ever since its introduction in 2007, the FTR scheme has been used by FPCs and official co-production treaties of all sizes to claim back costs incurred during the filmmaking process. Surprisingly, there is no requirement at present that states the FPC must own the film rights at the end of the project.

Why TaxBite?

Our knowledgeable team of chartered accountants have vast experience in UK film tax relief and other creative industry tax reliefs. We are well-known in the industry for our transparency and high standard of services, along with timely support for all our clients.

TaxBite is proud to have worked with businesses and individuals in many different niches. From Animators to Video Games Development Companies – we’ve helped them all. So, if you’re a Film Producer or a Co-Producer, we want to hear from you today! Click below to get in touch with TaxBite:

Film Tax Relief
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How do film tax credits work?

The BFI cultural test must be passed for a production company to receive UK Film Tax Relief. The cultural test is carried out by the B.F.I. (British Film Institute). The only exception is for Co-Productions.

A certificate will be provided to the film production company by the BFI if certain criteria are met. There are four sections in the cultural test, including sections relating to Cultural Contribution. You can score points based on contributions made to ensure the culture of Great Britain is at the forefront. An interim certificate can be provided if you get an application lodged with the BFI while the film is in the production stage.

Only films that are intended for theatrical release in the UK can claim UK film tax relief. If your project is intended for internet or television broadcast, it may be classed under television programmes. In which case we can help you with your high-end television, children’s and animation tax relief claims.

It’s also imperative that at least 10% of the core expenditure is on UK-qualifying production expenditure. The FPC must be responsible for pre and post-production and be actively engaged in relation to the planning, negotiations, and production delivery.

The filming of any British qualifying films (pre-prod and principal photography) needs to have commenced after the 1st of January 2007.

Who can’t claim UK film tax relief?

Films that are not recognised by the BFI as being British cannot claim Film Tax Relief. 

If the film is an official co-production, then the BFI can still allow you to claim if the film is not recognised as British, but it must officially acknowledge the work as an official co-production. Co-production Tax Relief is granted on qualifying UK production expenditure.

It is also not possible to claim Film Tax Relief if the film won’t receive a theatrical release in the UK, only films intended for UK audiences qualify. Only corresponding production companies in other co-producing party countries that are required to pay corporation tax can claim.

How can I apply for film tax relief?

Once the initial process of passing the cultural test and receiving a certificate from the BFI has been completed, then you can apply for UK Film Tax Relief. 

The application is made through the Corporation Tax Self-Assessment process. 

It is essential that the correct section of the CT600 form is completed.

The aforementioned certificate will be required as a supplementary document. This has to state that the movie has been certified as British.

All core expenditure has to be categorised for UK creative industry tax reliefs. You also need to ensure that spending in the UK and outside of the UK is split into two sections.

One of the above sections relates to UK qualifying production expenditure incurred, and the other is non-uk core expenditure incurred. There is a minimum UK spend requirement for this payable tax credit. According to HMRC, the definition of UK spend introduces a concept relating to where a service or product is used and consumed in the United Kingdom. So, if any service is used or consumed outside of the United Kingdom, it does not fall under UK expenditure.

Information regarding how profitable the project was needs to also be provided. If the film made a loss, then it needs to be determined if that loss can be given up in relation to FTR.

How many films Tax Relief can I claim?

The maximum amount that companies can claim is 20% of the film’s core production costs. This includes pre-production, principal photography, and post-production.

This is calculated as being the lower of the UK qualifying expenditure and 80% of the total core expenditure or the actual UK core expenditure incurred.

It is also possible for a film company to claim a discount on corporation tax in cases where the film makes a profit. 

If the film makes a loss, then you will receive the rebate as a cash payment.

Included Costs for Film Tax Relief?

Costs incurred during pre-production, principal photography, and post-production are all covered by the scheme. It is also possible to claim VFX if the film requires it.

To make a tax relief claim on the expenditure during these stages, then it is crucial that you find your UK production company responsible for all UK elements and work during these phases. 

How Does TaxBite Handle My Claim?

TaxBite is made up of knowledgeable chartered accountants who are readily available to look after your UK Film Tax Relief claims. You can find our process in the points below:

  1. Company Analysis: This is the company research and analysis phase, where TaxBite assesses which of your costs qualify for FTR. This is to decipher the maximum benefit you are eligible for, as there is a minimum UK spending requirement.
  2. HMRC Claim Submission: After you’ve sent us the relevant documents, we will handle the entire HM Revenue & Customs claim submission. FPCs must include Corporation Tax information, Core Expenditure and UK expenditure budget details, information on non-production filming activities (persons carrying out the UK activity), costs involving development, and other actual UK expenditure information under the clauses found in the Finance Bill.
  3. Processing The Claim: HM Revenue & Customs will then process FTR claims and payout the tax credit. If HMRC requests any new information, this will be looked after by TaxBite.

You have up to one year from your company’s filing date to make a claim. On the odd occasion, HMRC will accept late claims depending on their current rules set. If this is you, contact TaxBite as soon as possible so we can confirm if you qualify for not just one but any creative tax reliefs such as Animation Tax Relief or Video Games Tax Relief.

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Benefits Of Film Tax Relief

The primary benefits of Film Tax Relief are the amount that you can claim and the fact that there isn’t a limit for British qualifying films. Let’s look at each separately.

Claim Size

The FTR scheme is highly attractive to companies due to the large percentage of costs that you can claim back. At 80%, then this is a significant section of your total core expenditure.

No Cap

Unlike similar tax relief schemes in the culture sector, when you make a claim for a Film Tax credit, there is no limit on the cash amount that you can claim. This is a very beneficial feature for larger productions where the UK spending is extremely high. 

It simply does not matter if you’re an indie production company or one that specialises in big-budget feature films; you will be able to claim without any limit as long as you have received passed the BFI’s cultural tests and correctly fill out the required section of your Corporate Tax assessment.

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If you’re wondering if your production company is eligible, TaxBite can go through this with you. As long as you fall within the UK corporation tax net, you can most likely claim FTR. As you’ve reached this part of our article, you’ve seen that there are quite a few criteria that must be met.

We have helped many businesses take the complexities out of claiming creative tax reliefs, such as video games tax relief, high-end television tax relief, and more. So contact us today for further guidance.

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Other Creative Tax Reliefs Available

  • Animation Tax Relief
    Animation Tax Relief
  • Children's TV Tax Relief
    Children's TV Tax Relief
  • Film Tax Relief
    Film Tax Relief
  • High-End Television Tax Relief
    High-End Television Tax Relief
  • Museums & Galleries Exhibition Tax Relief
    Museums & Galleries Exhibition Tax Relief
  • Orchestra Tax Relief
    Orchestra Tax Relief
  • R & D Tax Credits
    R & D Tax Credits
  • Theatre Tax Relief
    Theatre Tax Relief
  • Video Game Tax Relief
    Video Game Tax Relief