UK Labour Government Gives Go-Ahead to Independent Film Tax Credit

Confirmation and Implementation Details

The UK’s Labour government has confirmed the Independent Film Tax Credit (IFTC), which was announced by Chancellor Rachel Reeves and Culture Secretary Lisa Nandy on the eve of the BFI London Film Festival today (October 9). The BFI certification unit will begin accepting applications from October 30, the date on which the IFTC will take effect after the formal ‘statutory instruments’ are laid by the government.

Eligibility and Requirements

The BFI’s deputy chief executive Harriet Finney has confirmed that the BFI has hired five additional staff to help with demand. Productions qualifying for the IFTC must have started principal photography on or after April 1, 2024, and only expenditure incurred on or after April 1, 2024 can be claimed.

The IFTC is aimed at films with a total core expenditure, or production budget, of up to £15m. They can now benefit from an enhanced credit of 53%, which equates to an actual relief of just under 40%, on up to 80% of qualifying expenditure. Productions must meet the terms of the BFI’s existing cultural test and have a UK writer or director, or be certified as an official UK co-production.

Additional Details and Clarifications

Those productions with a total core expenditure of up to £23.5m can also qualify for the IFTC; however, they can only claim the IFTC up to a maximum of 80% of £15m of the UK qualifying spend. Policymakers have identified £23.5m as the tipping point where it becomes more advantageous to claim the standard rate of AVEC on a film’s total core expenditure.

The standard AVEC has a headline credit rate of 34% and 25.5% in actual relief, capped at 80% of core expenditure. It is not yet clear whether the 80% cap will be removed for VFX costs claimed within AVEC, as proposed in the former Conservative government’s spring budget.

Background and History

The IFTC was announced under the last Conservative government as part of its March spring budget, and went through into the Finance Act in May, after years of lobbying by producer trade body Pact, the BFI and the independent film sector, amid rising costs, a challenging landscape in the face of deep-pocketed streamers and dwindling avenues for investment for UK independent producers.

Since the March budget, a surprise July general election was called and a new Labour government came into power, delaying ratification of the IFTC.

Irish Government’s Boosted Tax Incentive

The Irish government also announced last week that Ireland will receive its own boosted tax incentive of 40% for films budgeted under €20m (£16.7m), with further details to be announced later this week.

Conclusion

The UK’s Labour government has given the go-ahead to the Independent Film Tax Credit, providing a boost to the UK’s independent film sector. The IFTC is aimed at films with a total core expenditure of up to £15m and will provide an enhanced credit of 53%, which equates to an actual relief of just under 40%, on up to 80% of qualifying expenditure.

FAQs

* When will the IFTC take effect?
+ The IFTC will take effect on October 30, after the formal ‘statutory instruments’ are laid by the government.
* What are the eligibility requirements for the IFTC?
+ Productions must have started principal photography on or after April 1, 2024, and only expenditure incurred on or after April 1, 2024 can be claimed.
+ Productions must meet the terms of the BFI’s existing cultural test and have a UK writer or director, or be certified as an official UK co-production.
* What is the maximum amount of expenditure that can be claimed under the IFTC?
+ The maximum amount of expenditure that can be claimed under the IFTC is £15m, or 80% of the UK qualifying spend, whichever is lower.