Independent Film Tax Credit - Spring Budget announcement

By Triple Exposure

Person in blue plaid shirt writing in a notebook, surrounded by documents and a calculator on a desk.

Share

Despite calls for increased government support in the UK independent film sector, the scale of the recent announcement took many by surprise. Here’s what we know so far as news continues to unfold:

The New Independent Tax Credit (IFTC) will boast a headline rate of 53.3%.
IFTC eligibility extends to production budgets ranging from up to £15M, excluding marketing and distribution costs.
The new credit is taxable, resulting in an effective rate of 40% for companies paying 25% in taxes.
Additional criteria outlined by the BFI state that a production must have one of the following: a UK Writer, a UK Director, or certification under an official co-production.
Only productions commencing principal photography on or after April 1, 2024, will qualify, with costs incurred from that date onward being eligible.
Productions claiming IFTC cannot separately claim the AVEC’s 39% on Animation films or the new Visual Effect Tax Relief.
Those involved in TV production are ineligible for IFTC claims.
Further clarification is needed regarding the requirement that productions claiming IFTC must have a ‘Theatrical release,’ seemingly different from the current need for an ‘Intention for theatrical release.’
Note: TV productions are ineligible for IFTC claims.

Here’s a budget comparison of the three film incentives at £15M:

Audio Visual Expenditure Credit
Lower of
Total Core expenditure 80% of Total Core expenditure	£15,000,000 £12,000,000
and
UK Core expenditure UK core as a % of Total core	£15,000,000 100%
Lower of the above	£12,000,000
Core expenditure Avec @ 34%	£4,080,000
UK Corporation Tax amount of 25%	-£1,020,000
Cash Rebate	£3,060,000
Actual Relief %	25.50%

Enhanceable expenditure
Lower of
Total Core expenditure 80% of Total Core expenditure	£15,000,000 £12,000,000
and
UK Core expenditure UK core as a % of Total core	£15,000,000 100%
Lower of the above	£12,000,000
Core expenditure Tax Relief @ 25% of enhanceable expenditure
Tax Relief @ 25% of enhanceable expenditure	£3,000,000
Actual Relief %	25%

Independent film Tax credit
Lower of
Total Core expenditure 80% of Total Core expenditure	£15,000,000 £12,000,000
and
UK Core expenditure UK core as a % of Total core	£15,000,000 100%
Lower of the above	£12,000,000
Core expenditure IFTC @ 53.3%	£6,360,000
UK Corporation Tax amount of 25%	-£1,590,000
Cash Rebate	£4,770,000
Actual Relief %	25%

Financials, legals and insurance for filmmakers

Useful Links

Performance is a trading name of Howden UK Brokers Limited, which is authorised and regulated by the Financial Conduct Authority No. 307663. Registered in England and Wales under company registration number 02831010. Registered Office: One Creechurch Place, London, EC3A 5AF. Calls may be monitored and recorded for quality assurance purposes.
Reviewed & Cleared Limited is authorised and regulated by the Solicitors Regulation Authority – SRA number 597766. The company is registered in England and Wales. Registered number: 8473488. Registered office: Manfield House, 1 Southampton St, London WC2R 0LR, United Kingdom.
Alliotts LLP is a UK limited liability partnership registered in England and Wales under company number OC430772. A list of members names is available at our registered office: Manfield House, 1 Southampton Street, London, WC2R 0LR
Alliotts LLP is registered to carry on audit work in the UK, regulated for a range of investment business activities and licensed to carry out the reserved legal activity of non-contentious probate in England and Wales by the Institute of Chartered Accountants in England and Wales.