Additional support for independent film
Published 6 March 2024
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This publication is available at https://www.gov.uk/government/publications/corporation-tax-tax-relief-for-independent-film-productions/additional-support-for-independent-film
Who is likely to be affected
Companies claiming the Audio-Visual Expenditure Credit (AVEC) for qualifying film productions.
General description of the measure
This measure introduces additional support for ‘independent films’ that can currently claim the AVEC: the Independent Film Tax Credit (IFTC). Films that meet the IFTC qualifying criteria will be eligible for a higher rate of expenditure credit on their qualifying expenditure. The basic rate of credit under AVEC is 34% — independent films will receive a rate of 53%.
To qualify for the IFTC, a film must pass a new test administered by the British Film Institute. The test is intended to target films that have projected core expenditure of £15 million or less. The test is also expected to require that either key talent on the film, such as the director and writer, must be from the UK, or the film must be an international co-production.
The amount of credit that a company will be able to claim under this scheme will be capped at the maximum amount that would be available for a production with core expenditure of £15 million.
Films that do not qualify as independent films can continue to claim AVEC at the basic rate of 34%, or the uplifted rate of 39% for animated films. Companies will not be able to claim both the IFTC and the announced additional relief for visual effects expenditure in respect of the same film.
Policy objective
To further incentivise the UK independent film industry, the government will provide additional support through a new independent film expenditure credit. The credit will be targeted towards lower budget films that incubate UK talent.
Background to the measure
AVEC was introduced by the Finance Act 2024. Additional support for independent films was announced at Spring Budget 2024, with the legislation put forward in the accompanying Spring Finance Bill 2024.
Detailed proposal
Operative date
The higher rate is available on expenditure incurred from 1 April 2024, for films which commence principal photography on or after 1 April 2024. Claims can be made from 1 April 2025.
Current law
The current law is contained in Chapters 1 to 4 of Part 14A of CTA 2009.
Proposed revisions
All references are to CTA 2009.
A separate credit rate for independent films of 53% will be included in section 1179DV. New sections will be added to Part 14A setting out the qualifying criteria. New sections will also be added to cap the amount of expenditure credit available for productions which qualify as an independent film.
Summary of impacts
Exchequer impact (£million)
| 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 |
|---|---|---|---|---|---|
| — | 0 | -60 | -65 | -80 | -80 |
These figures are set out in Table 5.1 of Spring Budget 2024 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Spring Budget 2024.
Economic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
There is no impact on individuals, households and families as these measures only affect businesses.
Equalities impacts
This measure is not expected to have any impact on those in groups sharing protected characteristics.
Impact on business including civil society organisations
Fewer than 3000 businesses claim at least one of the creative industry tax reliefs. These measures are expected to have a negligible impact on around 700 businesses claiming for film productions each year. One-off costs could include familiarisation with the changes and updating systems to reflect them. Ongoing costs will include providing evidence for the cultural test of independent film, although this is expected be no greater than the current requirements for AVEC.
HMRC will support customers by providing clear guidance to assist businesses affected. Customer experience is expected to be largely the same as this measure does not impact how businesses interact with HMRC, claimants will have to go through the same certification and claim procedures. However, the measure adds more complexity as the eligibility criteria and credit calculations will be more complicated.
These measures are not expected to impact civil society organisations.
Operational impact (£million) (HMRC or other)
HMRC will require additional staff resources to deliver this measure as well as changes to IT. All operational costs are continuing to be developed.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
This measure will be monitored through information collected from company tax returns and the additional information form filled out by claimants to the creative industry tax reliefs.
Further advice
If you have any questions about this change, contact Stephanie Martinez at stephanie.martinez@hmrc.gov.uk, Yasmin Achha at yasmin.achha@hmrc.gov.uk or Alice Williams at alice.williams1@hmrc.gov.uk.