UK Film Tax Relief Broken Down

As a team of tax experts for the UK film industry, we are more than familiar with UK Film Tax Relief.

UK Film Tax Relief (FTR) can allow qualifying British films of any budget level to claim a payable cash rebate of up to 25%. The tax relief is capped at 80% of core expenditure, with no budget limit.

Qualifying for UK Film Tax Relief

In order to qualify for UK FTR, films must either pass a cultural test or qualify as an official co-production.

The film must be:

·      Intended for theatrical release

·      Reach a minimum UK spend requirement of 10%

·      Have a UK production expenditure on the of either 80% of total core expenditure or the actual UK core expenditure incurred

 

Minimum spend requirement

A set minimum of 10% costs must be spend on UK qualifying production expenditure.

UK qualifying production expenditure is defined as expenditure incurred on filming activities 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.