Film Tax Relief

Written by Arnold Hill on August 3, 2018

Film Tax Relief (FTR) was introduced in January 2007 and forms one of the corporation tax creative industry reliefs. FTR allows qualifying companies to claim either an enhanced tax deduction or in some circumstances claim a repayable tax credit when calculating their taxable profits.

The relief works by either increasing the amount of allowable expenditure or in instances where a company is making a loss it is able to surrender the loss and convert some of it into a tax credit repayable.

Eligible films

Film tax relief is available to film production companies engaged in the making of;

  • a British film;
  • which is intended for theatrical release (i.e. intention to be shown to the general public at a commercial cinema); and
  • where at least 10% of the core expenditure incurred on goods or services is used or consumed in the UK.

In order to further clarify on the above criteria, a film is defined as ‘any record, however made, of a sequence of visual images that is capable of being used as a means of showing that sequence as a moving image’. The film in question must be a certified British film, and hence must pass the Cultural Test (granted by the Department for Culture, Media and Sport) or be an official co-production.

Core expenditure is limited to expenditure on pre-production, principal photography and post production costs. Please note, core expenditure does not include development, distribution or non-production costs.

Calculation

The film tax relief can be claimed on the lower of:

  • 80% of the total core expenditure; or
  • Actual UK core expenditure incurred

A company can either then claim the eligible amount as an enhanced deduction or if the company is loss making, this can be surrendered for a repayable cash credit of 25%.

How can we help?

 If you would like an initial consultation to discuss whether your company is eligible to make a film tax relief claim, we would love to hear from you.