Even with cinemas closed for long stretches during the pandemic, film companies have been pressing on with creating new releases, many of which have been streamed straight to our homes rather than waiting for a cinema release.
Adapting to ‘the new normal’ of filming during Covid-19 has raised production costs, but fortunately there is already a government Film Tax Relief scheme, which can offset some of the core costs of creating a film. This is part of the Creative Industry tax reliefs – a group of 8 Corporation Tax reliefs that allow qualifying companies to increase their amount of allowable expenditure. This can reduce the amount of Corporation Tax the company needs to pay, or in the case of a loss, may allow them to convert some or all of this loss into a payable tax credit.
Film Tax Relief
A company can claim Film Tax Relief if:
- the film is intended for theatrical release
- at least 10% of the core costs relate to activities in the UK
In order to claim, your company must be actively engaged in planning & decision making, including directly negotiating, contracting, and paying for rights, goods and services. Your film must also pass a ‘cultural test’ or qualify through an internationally agreed co-production treaty, to be certified as British by the British Film Institute (BFI).
If you qualify, you can claim 80% of core expenditure, or the total amount of UK core expenditure, against your Corporation Tax, whichever is the lower amount. Core expenditure is expenditure on pre-production, principal photography and post-production. If you make a loss, you can surrender some or all of it for a payable tax credit at 25%.
You can make your claim on your company tax return and may make, amend or withdraw a claim up to one year after the company’s filing date.