Film Tax Relief

With the growing rise of the entertainment industry, there is a growing need for good content. Talent costs money, so producers need all the help they can get to finance their production and create a desirable product.

The UK government wishes to attract talent and production activities to the UK so has set up some generous tax incentives for creative industries, which can be used to help fund your production.

Reliefs are available for all types of films, intended for release to a paying public, including films first shown in the Cinema and those created specifically as a TV series.

These tax reliefs are available to approved co-productions as well as certified British Films, so it is worth checking them out.

Certified British Films

A film made by a film production company in the UK may qualify as a British film and hence be eligible for Film Tax Relief in computing its UK corporation tax liability. There is a special set of cultural tests to pass before a film may be certified as British, and at least 10% of the films production spend must be in the UK. The production company must be set up in advance of filming and apply via the British Film Institute (BFI)

Co-productions

The UK has many international co-production agreements. If registered as a co-production then the UK production company may be eligible for Film Tax Reliefs, even if the overseas partner in the film undertakes most of the production activities.

Remember to set up the UK production company and register as an official co-producer in advance of filming or you may not qualify for relief.

Film Tax Relief

Initial relief is by an enhanced deduction from profits before tax, up to 80% of core production costs, or actual UK spend

And, if the production is loss making then there is a secondary relief available by way of a 25% cash credit.

Relief is not dependant on the film being completed – it may be claimed part way through production, as long there is still the intent for theatrical release of the completed film.

Also See: Saving Tax By Making Your Spouse a Shareholder

Planning

Only certified films can get this relief.

Certification as British is based on nature of many different aspects of the film.

Certification as a Co-production is only possible if in line with the relevant agreement.

Setting up a film production company must be done in advance of filming as must co-production registration.

It is therefore very important to check the rules at the planning stage and to set up systems that can help you easily identify and then record nature and location of staff, work and spend.

Lack of planning can cost you these reliefs.

Record Keeping

Relief is based on costs,

• Up to 80% of core production spend
• Or UK core production spend

Which part of the film are staff working on? and What are the costs for?

• Development
• Pre-production
• Principal photography
• Post-production
• Distribution
• Other non-production activities

Who’s costs are they?

• UK Film Production Company
• UK Co-producer
• Other partners

Where is that work done? – UK or elsewhere?

All this needs to be recorded, and if done as you are going along then it will be easier to categorise results and hence prepare the required figures.

Planning and good record keeping are key to being able to claim these reliefs in a timely manner.

Let DNS Accountants assist you in your journey

Download our guide on Film Tax relief

For more information contact us on 03300 886 686 or e-mail us at enquiry@dnsaccountants.co.uk

Also See: How to work out and claim relief from Corporation Tax trading losses?

About the author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.