UK Indie Film Sector Sees Boost with Tax Credit Progress

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BFI deputy CEO Harriet Finney expressed optimism that the Independent Film Tax Credit (IFTC) will be ratified under the new UK government. Speaking at Screen’s ‘The Future of UK Film’ Summit, Finney confirmed that the Department for Culture, Media and Sport (DCMS) is working hard to lay the statutory instrument that will bring the IFTC into force.

The IFTC, an enhanced tax relief of 40% for films budgeted under £15m, was announced in the March spring budget and became law in May. However, the process has been delayed due to the surprise July general election and the subsequent change in government.

Finney reassured producers that the BFI is ready to deal with the anticipated rise in certification submissions once the IFTC is implemented. “At the BFI, we’ve done a lot of work in terms of making sure that our certification unit is fully staffed,” she said. “We’re not only dealing with quite a high volume of backlog at the moment, we’ve brought on five new staff to help deal with what we’re anticipating will be a high demand for the IFTC.”

Moses Nyachae, partner in the film and TV team at chartered accountants Saffery, echoed Finney’s confidence. He confirmed that there are no indications that the IFTC will not go ahead and that it has received royal assent. “It’s received royal assent, it’s in the act. We’re just waiting for that technical step where they release the statutory instrument, which gives a bit more detail behind the actual legislation,” he said.

While producers cannot currently claim the IFTC, Nyachae said that producers are already working with the BFI to issue certificates and are preparing for the moment when the statutory instrument is laid. “We’re working with producers who are certainly claiming the AVEC [Audio-Visual Expenditure Credit at its current rate of 34%] with the intention of retrospectively going back and claiming IFTC. We are also in discussions with various producers who are looking to potentially cashflow an amount hedged against or secured against the IFTC,” he said.

Coutts’ executive director of media banking Judith Chan noted that the company is excited about the IFTC and is preparing to lend against it. “We’re a bit in limbo, but we’re very excited about this. We’re preparing ourselves for when we can lend against this,” she said.

Eligible films will be able to opt-in to claim the enhanced Audio-Visual Expenditure Credit (AVEC) at a rate of 53% on up to 80% of core expenditure, which equates to around 40% in relief. If a film’s budget when in production subsequently exceeds £15m, the production company can choose either to continue to claim IFTC at 53% up to a maximum of £6.36m credit before tax, or choose instead to claim AVEC at 34% on all its qualifying expenditure.

Nicky Bentham, producer at Neon Films and co-chair of trade body Pact’s film producers group, reinforced how critical the IFTC will be to indie filmmakers, who have reached a crisis point with regards to being able to secure budgets, get films into production and make a living. “The state of the independent film sector is abysmal – I don’t think it’s been worse since I started working in the industry,” she said.

Conclusion:

The IFTC has the potential to be a game-changer for the UK indie film sector, providing a much-needed boost to producers and helping to keep film production in the UK. However, the process is not yet complete, and producers will need to wait until the statutory instrument is laid before they can start claiming the enhanced tax relief.

FAQs:

* When will the IFTC be implemented?
+ The BFI is unable to give a specific date, but it is expected to happen soon.
* What is the eligibility criteria for the IFTC?
+ Eligible films must meet the BFI’s existing cultural test for a UK film and additionally have a UK writer, UK director or be an official co-production. They must also be intended for theatrical release.
* What is the rate of tax relief for the IFTC?
+ The rate of tax relief is 40% for films budgeted under £15m.
* Can producers currently claim the IFTC?
+ No, producers cannot currently claim the IFTC. The process is delayed due to the change in government, but it is expected to happen soon.
* How will the IFTC affect the UK indie film sector?
+ The IFTC has the potential to provide a much-needed boost to producers and help to keep film production in the UK.