Tax relief
Value of UK tax relief
- For films that cost up to £20 million, the Film Production Company (FPC) can claim an enhanced deduction of 100% with a payable cash element of 25% of UK qualifying film production expenditure.
- For films that cost over £20 million, the FPC can claim an enhanced deduction of 80% with a payable cash element of 20% of UK qualifying film production expenditure. We have an example of a British film claiming tax relief to download (in related media on the right hand side of this page).
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 up to a maximum of 80% of total qualifying costs. 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 6118.
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:
