Film Tax Relief – British Film Commission (2022)

The UK’s film and high-end television tax reliefs are widely recognised as the most transparent, inclusive and reliable production incentives in the world.

Find out how your feature film can benefit.

Film Tax Relief

Value

  • For all British qualifying films of any budget level, the Film Production Company (FPC) can claim a payable cash rebate of up to 25% on UK qualifying expenditure.
  • The Tax Relief is capped at 80% of the core expenditure i.e. even if you have 100% UK-qualifying expenditure, tax relief is only payable on up to 80%.
  • There is no limit on the budget of the film or the amount of relief payable within the 80% cap.

Qualifying as British via the cultural test

TheCultural Testfor film and high-end television is points-based, with sections relating to content, cultural contribution, location, and cast and crew.
Projects need to achieve at least 18 from a possible 35 points.
The sections are:
• Cultural content
• Cultural contribution
• Cultural hubs
•Cultural practitioners

Qualifying as a British co-production

The UK has film co-production agreements with Australia, Canada, China, France, India, Israel, Jamaica, Morocco, New Zealand, Occupied Palestinian Territories, and South Africa. Of these, Australia, Canada, New Zealand, Israel and the Occupied Palestinian Territories also allow for television programmes.

The UK is also a signatory to the European Convention on Cinematographic Co-production.
• There must be a UK production company responsible for all UK elements of the production from beginning to completion.
• There must be corresponding production companies in the other co-producing party countries.
• There must be a co-producer in each country, and an application lodged in each country.
• The decision will be made jointly by the authority in each country.
• The filmmaking contribution from each country will be in proportion to the finance from each country.

For more information on co-productions, please visit the BFIwebsite

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Film Production Company (FPC)

  • The FPC responsible for the film must be within the UK corporation tax net.
  • Must make the arrangements for pre-production, principal photography, VFX, post & delivery.
  • It is best to incorporate sooner rather than later so costs can be included towards Tax Relief claim
  • Can be a UK ‘off-the-shelf’ company set up on behalf of an international parent company.
  • Work can be sub-contracted as long as this is reflected in the FPC’s accounts.
  • Loan-out companies can be used as long as this is reflected in the FPC’s accounts

Intention for theatrical release

  • There must be an intention for theatrical release.

If there is any doubt about the intention, the following factors would count in favour of the film being intended for theatrical release:

  • a finance plan written on the basis that the film will be released theatrically;
  • a normal full-length or short feature film of a type commonly shown at cinemas;
  • production in a format suitable for theatrical showing at the commercial cinema;
  • payment to actors and other participants on terms in line with those prevailing for cinema films (rather than, for example, television work), and;
  • the relevant person can demonstrate, at the end of the relevant accounting period, the intention to seek a contract to present the film in the cinema.

A factor which would count against an intention for theatrical release is where there are no commercial cinemas that show the particular type of film.

For more information, pleaseread HMRC’s detailed guidance.

Minimum UK expenditure and included costs

At least 10% of the film’s core expenditure must be UK expenditure.

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Included costs

  • UK-qualifying production expenditure is defined as expenditure ‘used or consumed’ in the UK i.e. costs incurred by the FPC on filming activities (pre-production, principal photography, visual effects and post production) that take place within the UK, irrespective of the nationality of the persons carrying out the activity.
  • Above-the-line, including actors and directors, is included, irrespective of nationality.
  • Core expenditure incurred at a later stage on a project where there are ‘residuals’ to be paidwill attract further relief; for example further payments to actors and directors.

Excluded costs

  • Bond
  • Financing
  • Option payments for book rights
  • Development
  • Entertainment
  • Publicity
  • E + O insurance
  • Capital Expenditure

VFX/Post

There is no obligation to carry out all production activity in the UK; it is possible to qualify for the UK Film Tax Relief by carrying out elements of the production process in the UK, e.g. VFX/post or principal photography, as long as the minimum expenditure requirement is met (10%) and all other qualifying criteria are satisfied.

Even if only certain elements of the production process are taking place in the UK e.g. VFX/post, it is essential that the FPC is incorporated in the UK as early as possible in order to qualify for the UK Film Tax Relief.

In addition to VFX/post/soundtrack recording costs qualifying for the UK Film Tax Relief, the prorated ‘neutral’ costs (qualifying costs which are spread throughout the production process, including senior producers, writers, director, insurances) will also qualify whilst activity is based in the UK i.e. if VFX/post/soundtrack recording costs amount to 20% of the total core expenditure, 20% of ‘neutral’ costs will also qualify whilst activity is based in the UK.

See case studies below for further information.

Additional info

  • Interim claims can be made – at the conclusion of principal photography, for example – so that pro-rated tax relief can contribute to post-production costs.
  • There is no cap on funds available.
  • There is no ‘sunset’ date.
  • The Tax Relief has been supported and maintained by both leading UK political parties.
  • The UK’s planned exit from the European Union will not negatively impact the Film Tax Relief.
  • The UK has a range of national and regional filming incentives which can be combined with the Film Tax Relief.
  • It is possible to combine the UK Film Tax Relief with incentives from non-UK jurisdictions either under a Production Service Agreement or by qualifying as an official co-production.

How to apply

You will need:

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  • DCMS British Film certificate (interim/final) which you will receive via the British Film Institute’s (BFI) Certification Department as a result of qualifying as a British film
  • Statutory accounts
  • Tax return

Turnaround Times

For straight forward claims:

  • BFI (DCMS) turnaround time is approximately 21 days.
  • HM Revenue & Customs turnaround time is approximately 28 days.

Contact

Contact us for further guidance on UK tax reliefs and how to qualify as a British production.

Contact the BFI to find out how to apply for certification as an official British production under the cultural test or as a co-production.

Anna Mansi, Head of Certification
+44 (0)20 7173 3214
anna.mansi@bfi.org.uk

Contact HMRC to find out how to apply for UK Creative Sector Tax Reliefs.
Manchester Incentives and Reliefs Team
+44 (0)30 0051 0191
creative.industries@hmrc.gsi.gov.uk

Case Studies

Below are just two examples of how you canqualify for the UK film tax relief.

VFX/Post case study

A script that has been developed in the US needs to shoot in a location with sand dunes or tundra for its principal photography, butthe studio/producer wants to bring VFX, post,and the soundtrack recording to the UK.

Core expenditure is allocated as follows:

Activities
Preparing costings and shooting schedule-Non-UK
Rehearsals-Non-UK
Principal Photography-Non-UK
VFX/Post-production/Soundtrack recording-UK

As the project has satisfied all qualifying criteria i.e. the UK FPC is incorporated in the UK during early prep, theVFX/post/soundtrack recording is then carried out in the UK and thecosts of which exceed the minimum UK-qualifying spend of 10%;then the VFX/post/soundtrack recording costs will qualify for the UK Film Tax Relief.

In addition to VFX/post/soundtrack recording costs qualifying for the UK Film Tax Relief, the prorated ‘neutral’ costs (qualifying costs which are spread throughout the production process, including senior producers, writers, director, insurances) will also qualify whilst activity is based in the UK i.e. if VFX/post/soundtrack recording costs amount to 20% of the total core expenditure, 20% of ‘neutral’ costs will also qualify whilst activity is based in the UK.

This same structure wouldalso apply to any other element of the production process ‘used or consumed’ in UK, e.g. principal photography, as long as the minimum UK-qualifying spend, and all other qualifying criteria are satisfied.

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Screenwriter case study

An FPC owns the film rights for a book, and decides to make a feature based on it. It enlists a screenwriter to prepare the initial drafts of a screenplay and to rework them into a script which is used as the basis of filming. The nature of the services provided by a screenwriter is the provision of a script.

The script is used as follows:

Activities
Preparing costings and shooting schedule-UK
Rehearsals-UK
Principal Photography- PartUK, part overseas
VFX/Post-production/Soundtrack recording-PartUK, part overseas

These costs willbe pro-rated, meaning all UK-qualifying spendis eligible for Tax Relief.

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FAQs

How does UK film tax relief work? ›

For all British qualifying films of any budget level, the Film Production Company (FPC) can claim a payable cash rebate of up to 25% on UK qualifying expenditure.

Is a TV tax deductible UK? ›

Value. For scripted television projects with a minimum core expenditure of £1 million per broadcast hour, the TV Production Company (TPC) can claim a payable cash rebate of up to 25% on UK qualifying expenditure.

What qualifies as a British film? ›

In order to qualify for the UK's creative sector tax reliefs, all films, animation and television programmes or video games must be certified as British through the cultural test or qualify as an official co-production.

What is a film tax incentive? ›

Movie production incentives are tax benefits offered on a state-by-state basis throughout the United States to encourage in-state film production. Since the 1990s, states have offered increasingly competitive incentives to lure productions away from other states.

How does a film tax credit work? ›

A refundable tax credit is a refund the produc- tion company receives from the state after paying its income taxes in that state. Producers are eligible to receive these refundable credits even if they have no state income tax liability, which is often the case for production com- panies making one-off films.

How is Theatre tax relief calculated? ›

The amount of theatre tax credit is proportional to the amount you spend on a production. The more the costs or the higher the number of theatre productions, the higher the reward. On average by claiming TTR a production company can reduce its 'core expenditure' costs by 20-25%.

Is film investment tax deductible? ›

A taxpayer may elect to treat the cost of any qualified film or television production, and any qualified live theatrical production, as an expense which is not chargeable to capital account. Any cost so treated shall be allowed as a deduction.

How are actors taxed UK? ›

Most actors pay tax through either Self Assessment, where it's up to you to pay the tax you owe, or via Pay As You Earn (PAYE), where your employer takes the tax off your earnings at source so you don't have to. For many, it's a combination of both.

Can a TV be a tax write off? ›

The television is deductible based on its business use and not based on the fact that it is simply a television. IRS code 162 defines business expenses as ordinary and necessary items needed to produce revenue for a business.

How are British films funded? ›

BFI. The BFI Film Fund has a number of funding strands, investing over £26m of Lottery funds per year to support film development, production (including majority and minority co-productions) and distribution activity in the UK.

How do I get a tax certificate UK? ›

Use online RES1 form for requests. Send requests to your Customer Compliance Manager, or a nominated person, if your company's tax affairs are dealt with by Large Business. If your company is not dealt with by Large Business you should send requests to the Corporation Tax Services office.

What is the BFI film Fund? ›

The BFI Production Fund awards money from the National Lottery to support original live action, emerging media and animation feature filmmaking from storytellers demonstrating a bold vision and creative excellence.

What are the types of tax incentives? ›

Tax incentives can be grouped into a number of categories: tax holidays, investment allowances and tax credits, timing differences, reduced tax rates, and free economic zones. Each type raises different design and drafting issues.

What are film subsidies? ›

State public funds (i.e. taxpayers' money) are given to film production companies in the form of tax breaks to entice them to make movies in those states, hopefully bringing in added revenue. California's film tax subsidy (up to $100 million per year) went into effect in 2009 to counteract other states that were ...

How many states have film tax credits? ›

It's an endeavor many economists see as financially foolish, but still features states like California, New York, Georgia, New Mexico, New Jersey and a handful of others. While 35 states now have some form of film-tax breaks, studios often go to the highest bidder, industry officials said.

Which country is best for filmmaking? ›

Why? The United Kingdom tops the list as the best country for film studies thanks to its reputable film schools and award-winning alumni.

Do movie producers pay taxes? ›

The manufacture of VCDs and DVDs by home entertainment companies is exempted from levy of excise duty and hence, any service tax charged by film producers will be an additional cost. This cost will be borne either by producer or home entertainment company ultimately reducing the net earnings from a film.

What does tax credit means? ›

A tax credit is a provision that reduces a taxpayer's final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer's tax bill directly.

How far back can you claim Theatre tax relief? ›

When you can claim. You can make, amend or withdraw a claim for creative industry tax reliefs up to one year after the company's filing date.

When did Theatre tax relief start? ›

Theatre Tax Relief was announced in Finance Act 2014 and effective from 1 September 2014. Detailed guidance for theatrical companies, including examples of how the relief is calculated, can be found in the Theatre Tax Relief Manual.

Can charities claim Theatre tax relief? ›

Theatre Tax Relief (TTR) is an incentive designed by the government. It allows both commercial as well as charitable companies to claim tax relief on their Corporation Tax for their dramatic productions, live performances and more (keep reading to find out what productions are eligible).

Are film production costs capitalized? ›

ASC 926 requires that film costs be capitalized while a film is under production. However, it also requires that when the fair value of a film is less than the unamortized film costs related to that film, a film producer should write off the amount by which the unamortized film costs exceed the film's fair value.

What is a tax write off example? ›

If a company generates $10,000 in income and deducts the $1,000 cost of a business insurance policy, their net taxable income will become $9,000. The cost of the business insurance would be a tax write-off. A business tax rate will then be applied to the $9,000 to determine the amount of taxes owed.

What is Section 181 of Income tax Act? ›

Section # 181 of The Income Tax Ordinance, 2001. (1) Every taxpayer shall apply in the prescribed form and in the prescribed manner for a National Tax Number Certificate (Substituted for "Card" by Finance Act, 2003). (2) An application under sub-section (1) shall be accompanied by the prescribed fee.

What expenses can an actor claim? ›

What deductions can I claim as an actor? Possible tax deductions for actors include business travel, agent fees, union dues, promotional expenses (headshot, demo reel, etc.), among other things. In every trade or business, there are certain deductions that can be claimed relating to the job.

How much do actors pay in taxes? ›

After a federal tax rate of 35% has been taken out, Movie Actors could expect to have a take-home pay of $202,783/year, with each paycheck equaling approximately $8,449 *. * assuming bi-monthly pay period. Taxes estimated using tax rates for a single filer using 2018 federal and state tax tables.

Do child actors pay tax UK? ›

We have been asked this question many times over the years, and its a common misconception that child actors and all other child performers do not have to pay tax. Income tax in the UK is charged on an individuals income and tax legislation does not mention anything about the age of the individual.

Can I claim Netflix on tax? ›

You can't claim a deduction for the cost of pay television or streaming services such as Foxtel or Netflix. This is a private expense.

What deductions can I claim without receipts? ›

If you don't have original receipts, other acceptable records may include canceled checks, credit or debit card statements, written records you create, calendar notations, and photographs. The first step to take is to go back through your bank statements and find the purchase of the item you're trying to deduct.

How much of my phone bill can I write off? ›

If you're self-employed and you use your cellphone for business, you can claim the business use of your phone as a tax deduction. If 30 percent of your time on the phone is spent on business, you could legitimately deduct 30 percent of your phone bill.

How do I get my film funded? ›

  1. Get Funding for a Film Through Grants and Fellowships. ...
  2. Take Advantage of Tax Incentives for Filmmaking. ...
  3. Secure Private Investment to Fund Your Film. ...
  4. Make a Pitch for Product Placement in Your Film. ...
  5. Get Crowdfunding Donations for Your Film. ...
  6. Finance Your Film Out of Pocket.
Jan 13, 2022

How do short films get funding? ›

How to Raise Money for a Film: 5 Film Financing Resources
  1. 5 ways to get film funding for a production.
  2. Submit applications for grants. ...
  3. Connect with investors. ...
  4. Use film crowdfunding. ...
  5. Speak to friends and family. ...
  6. Gain sponsorships. ...
  7. Inspiring film fundraising stories on GoFundMe. ...
  8. Start film crowdfunding for your next project.
Feb 24, 2022

How do I get a grant for a movie? ›

In a film grant application, you will usually want to include an artist statement, a film treatment, and a film budget top sheet. Other elements which may boost your chances of getting funding for your film project include a mood board and a letter of recommendation.

What is a UK tax certificate? ›

A tax residency certificate is a document issued by Her Majesty's Revenue and Customs (HMRC) that proves your residency in the United Kingdom and allows you to claim tax relief in other countries. For overseas authorities to validate your claim, HMRC must confirm that you are a UK resident.

Am I still a UK resident if I live abroad? ›

You can live abroad and still be a UK resident for tax, for example if you visit the UK for more than 183 days in a tax year. Pay tax on your income and profits from selling assets (such as shares) in the normal way. You usually have to pay tax on your income from outside the UK as well.

How long does it take to get a tax residency certificate UK? ›

Processing time: 1 to 2 days depending on certification required. HM Revenue and Customs (HMRC) will provide UK resident persons and companies with an official 'certificate of residence'. This document is normally used by a UK resident person or business to confirm they are located in the UK for tax purposes.

How hard is it to get BFI funding? ›

In summary… In the past three years, the BFI has received 2,505 applications for funding. Of those, 720 were successful, equating to 29% of applications. Almost half of all applications to the BFI for development funding in 2012/13 were successful.

What films have BFI funded? ›

Films funded by the BFI
FilmAwardsGenre(s)
Great Expectations3Drama Romance
Invisible Woman4Biopic Drama History
'715Action Drama Thriller
Frank3Comedy Drama Music
6 more rows
Apr 13, 2015

How do independent filmmakers get funding? ›

Film funding can be sourced from a variety of sources such as Government Funding, Tax Incentives, Pre Sales, Negative pick-up deal, Gap Financing, Fiscal Sponsorships, Film Grants, Product Placement, Private Investors and Crowdfunding.

What are the disadvantages of tax incentives? ›

Some disadvantages of tax incentives are: Tax incentives may bring about unintended windfalls by rewarding firms for what they would have done in the absence of the incentive. Tax incentives often result in undesirable inequities. Tax incentives raid the federal treasury.

Are tax incentives good? ›

Incentives structured with targeted attention to fiscal health can also boost the level of funding for capital expenditures. This increased funding can provide valuable multiyear resources for critical infrastructure, helping to ease a long-term budgetary stressor many localities face.

What are the three types of incentives? ›

But incentives are not just economic in nature – incentives come in three flavours: Economic Incentives – Material gain/loss (doing what's best for us) Social Incentives – Reputation gain/loss (being seen to do the right thing) Moral Incentives – Conscience gain/loss (doing/not doing the 'right' thing)

What are production incentives? ›

Production Incentives means actual cash proceeds received by the Company or the Members or their Affiliates attributable to production tax credits or rebates, government subsidies, and the like relating to production of the Picture.

What is California film tax credit? ›

The state's Film & Television Tax Credit Program has been shown to generate $24 in economic activity for every $1 invested – spurring tens of billions of dollars in economic output, helping create over 110,000 jobs, and bringing shows and films to California.

Does Florida have a film tax credit? ›

While local film incentives help, Film Florida tells us that doesn't benefit Florida as a whole to attract major productions to try and compete with other southeastern states that have film incentive programs.

How does a film tax credit work? ›

A refundable tax credit is a refund the produc- tion company receives from the state after paying its income taxes in that state. Producers are eligible to receive these refundable credits even if they have no state income tax liability, which is often the case for production com- panies making one-off films.

How do state film tax credits work? ›

The idea behind a film tax credit is pretty simple: by moving production to a state, you'll be able to save money on taxes owed, or get some other perks in exchange for shooting on location there. Of course you may have to use a certain amount of local vendors to qualify, but every offer is different.

What are film tax rebates? ›

Film tax incentives typically come in the form of tax credits equal to a percentage of a film or television production's qualified in-state spending and/or exemptions from sales tax on qualified transactions.

How are actors taxed UK? ›

Most actors pay tax through either Self Assessment, where it's up to you to pay the tax you owe, or via Pay As You Earn (PAYE), where your employer takes the tax off your earnings at source so you don't have to. For many, it's a combination of both.

Is film investment tax deductible? ›

A taxpayer may elect to treat the cost of any qualified film or television production, and any qualified live theatrical production, as an expense which is not chargeable to capital account. Any cost so treated shall be allowed as a deduction.

How are British films funded? ›

BFI. The BFI Film Fund has a number of funding strands, investing over £26m of Lottery funds per year to support film development, production (including majority and minority co-productions) and distribution activity in the UK.

Are film grants taxable? ›

Grants: The state issues a tax-free payment to production companies for filming. Film Tax Rebates: Film tax rebates are paid to production companies by the state, usually as a percentage of the company's qualified expenses. They are similar to grants, but they are taxable.

What expenses can an actor claim? ›

What deductions can I claim as an actor? Possible tax deductions for actors include business travel, agent fees, union dues, promotional expenses (headshot, demo reel, etc.), among other things. In every trade or business, there are certain deductions that can be claimed relating to the job.

How much do actors pay in taxes? ›

After a federal tax rate of 35% has been taken out, Movie Actors could expect to have a take-home pay of $202,783/year, with each paycheck equaling approximately $8,449 *. * assuming bi-monthly pay period. Taxes estimated using tax rates for a single filer using 2018 federal and state tax tables.

Do actors get tax breaks? ›

Actors classified as employees can no longer deduct their expenses under the Tax Cuts and Jobs Act. By Stephen Fishman, J.D. Earning a living as an actor has always been tough. Unfortunately, due to the Tax Cuts and Jobs Act (HR 1, "TCJA"), it's going to get even tougher.

Are film production costs capitalized? ›

ASC 926 requires that film costs be capitalized while a film is under production. However, it also requires that when the fair value of a film is less than the unamortized film costs related to that film, a film producer should write off the amount by which the unamortized film costs exceed the film's fair value.

What is a tax write off example? ›

If a company generates $10,000 in income and deducts the $1,000 cost of a business insurance policy, their net taxable income will become $9,000. The cost of the business insurance would be a tax write-off. A business tax rate will then be applied to the $9,000 to determine the amount of taxes owed.

What is Section 181 of Income tax Act? ›

Section # 181 of The Income Tax Ordinance, 2001. (1) Every taxpayer shall apply in the prescribed form and in the prescribed manner for a National Tax Number Certificate (Substituted for "Card" by Finance Act, 2003). (2) An application under sub-section (1) shall be accompanied by the prescribed fee.

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