Cloud Atlas, courtesy of Warner Bros

UK Film Tax Relief

Value of UK Film Tax Relief

  • For films of all budget levels, the Film Production Company (FPC) can claim a payable cash rebate of up to 25% of UK qualifying film production expenditure.
  • For films with a core expenditure of more than £20m, which completed principal photography before 1 April 2015, the FPC can claim a payable cash rebate of up to 25% on the first £20m of qualifying UK expenditure, with the remaining qualifying UK expenditure receiving a 20% tax rebate.

Accessing 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%
  • 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 10% 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.

Incentives & Reliefs Team

The UK now has a specialist government team to deal with the corporation tax affairs of companies which are eligible for Film Tax Relief. The team, which is part of HM Revenue & Customs, works mostly with Special Purpose Vehicles established to make a single film.

The Manchester Incentives & Reliefs Team can be contacted at creative.industries@hmrc.gsi.gov.uk or tel: +44(0) 3000 510 191.

Further guidance

Media lawyers and accountants can provide advice on British qualification and accessing UK tax relief. Contact information can be found in UK production directories:

The Knowledge

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