The Independent Film Tax Credit - Introduction
In an announcement by the Chancellor of the Exchequer during the Spring Budget on 6 March 2024, the UK government has introduced the Independent Film Tax Credit (IFTC).
The credit is aimed at revitalising the UK's independent film industry.
This initiative emerges in the wake of the Culture, Media and Sport Committee's examination of sectoral challenges, underlining the government's commitment to nurturing filmmaking within the country.
Understanding IFTC and AVEC
The IFTC aims to offer producers of eligible films the opportunity to claim an enhanced Audio-Visual Expenditure Credit (AVEC) on qualifying expenditure.
With a gross rate of 53%, this translates to a net tax credit of 39.75%, capped at £6.36 million per film.
The introduction of IFTC builds upon the AVEC regime, initiated on 1 January 2024, which already provides a tax credit for film and high-end TV programmes, children’s TV, and animation projects.
Notably, the Spring Budget also announced an increase in AVEC for visual effects costs and the removal of the 80% cap on qualifying expenditure in this category from 1 April 2025.
Eligibility Criteria for IFTC
Films aiming to qualify for IFTC must meet specific criteria, including a theatrical release, a production budget up to £15 million, commencement of principal photography on or after 1 April 2024, and adherence to the British Film Institute (BFI) test for UK independent film.
The BFI's assessment will ensure that films either feature a UK writer or director, or are certified as official UK co-productions.
Navigating the Transition
Films commencing principal photography from 1 April 2024 are eligible to opt-in for IFTC, with claims being submitted from 1 April 2025.
This transitional period allows production companies to choose between AVEC and the previous tax relief schemes for expenditure incurred from 1 January 2024.
However, all new productions from 1 April 2025 must utilize AVEC, with a complete transition to AVEC mandated by 1 April 2027.
Implications and Expectations
The introduction of IFTC and adjustments to AVEC represent a significant boon for independent filmmakers in the UK.
By enhancing support for the independent film sector and incentivizing visual effects production, these measures are expected to bolster creative endeavors, attract new talent, and secure the industry's future.
The government's strategic investment in independent filmmaking not only acknowledges the sector's cultural significance but also aims to catalyze growth and innovation post-pandemic and beyond.
Independent Film Tax Credit - Final thoughts
If you have any queries about the new Independent Film Tax Credit, or any other UK tax matters, then
please do get in touch.