TTR40045 - Qualifying productions: minimum expenditure condition - transition rules

For accounting periods ending on or after 1 April 2024, the European expenditure condition is replaced by the UK expenditure condition.

This means that the previous requirement for at least 25% of a production’s core expenditure to be European expenditure no longer applies. It is replaced by a requirement that at least 10% of a production’s core expenditure is UK expenditure. 

UK expenditure is defined as: ‘expenditure on goods and services which are used or consumed in the United Kingdom’. 

This change does not apply to a production if 

• it has entered the production phase before 1 April 2024, and 

• the separate trade in respect of the production ceases before 1 April 2025. 

The European expenditure condition applies to these productions throughout. 

If 

• a production begins before 1 April 2024 but the separate trade does not cease before 1 April 2025, and 

• the European expenditure condition is met in respect of core expenditure incurred before 1 April 2025 

then the production will not lose its entitlement to relief on expenditure incurred before 1 April 2025 in the event that it later fails the UK expenditure condition. 

The production company’s tax return for the first accounting period which ends on or after 1 April 2025 should include a statement of how much of core expenditure incurred before 1 April 2025 is European expenditure, to show whether the European expenditure condition was met at that date.