Value of UK tax relief
- For films with a total core expenditure of £20 million or less, the film production company can claim payable cash rebate of up to 25% of UK qualifying film production expenditure;
- For films with a core expenditure of more than £20 million, the film production company can claim a payable cash rebate of up to 20% of UK qualifying film production expenditure;
- Examples of a British film claiming tax relief can be found on the HM Revenue and Customs website.
Accessing UK 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 25%;
- 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.
- The FPC responsible for the film needs to be within the UK corporation tax net.
Minimum UK spend requirement
A minimum of 25% of costs must be spent on UK qualifying production 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.
Further details on the definition of “used or consumed” are available in HMRC’s guidance on Film Tax Relief.
Film production company (FPC)
UK film tax relief is available to FPCs.
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).
The FPC must be within the UK corporation tax net.
Film tax unit
The UK now has a specialist government unit to deal with the corporation tax affairs of companies which are eligible for film tax relief. The unit, which is part of HM Revenue & Customs, works mostly with Special Purpose Vehicles established to make a single film.
The Manchester Film Tax Credit Unit can be contacted at RandD.Manchester@hmrc.gsi.gov.uk or tel: +44 (0)161 288 6310.
Media lawyers and accountants can provide advice on British qualification and accessing UK tax relief. Contact information can be found in UK production directories: