What is Film Tax Relief?
An Artistic Venture with Fiscal Benefits
Estimated at £120 million per year, Film Tax Relief is one of the UK government's creative industry tax reliefs, designed to support and foster growth in the British film sector. It's a nuanced system that allows qualifying companies to claim a payable cash rebate for a portion of their production costs, thus significantly reducing the financial outlay of film-making endeavours.
Why It Matters
For those eligible, FTR can radically reshape the economic landscape of a project. By allowing eligible companies to claim back up to 20% of their allowable production spend, FTR becomes a powerful tool for leveraging investment and ensuring that creativity isn’t stifled by financial impediments.
Who Can Claim Film Tax Relief?
In short, film production companies that produce "British" films. The eligibility, however, is a little bit more complex than that; companies must meet a set of cultural and fiscal criteria to qualify.
Cultural Criteria
- As a production company, your intention for the theatrical release of the film is a major factor.
- It must pass the British Film Institute's 'cultural test'. However; this is not the only way to be classified as British, if the film meets the requirements set by bilateral production treaties or the European Convention of Cinematic Co-Production Terms, it passes as British.
- At least 10% of the production costs must be spent on UK expenditure.
- The majority of the main cast, crew, and director must be British or from the European Economic Area (EEA).
Fiscal Criteria
- The company is registered in the UK for corporation tax.
- At least 25% of production costs are spent on core expenditure (i.e., goods, services and facilities that contribute to the creation of the final product).
- The production spends at least 10% of its production costs in the UK.
- The company must have a minimum of 51% British ownership or be responsible for at least 51% of the film’s core expenditure.
What Costs Can You Claim Back?
Reel to Reality: Translating Expenditure into Credits
The expenditure that forms the backbone of an FTR claim is as diverse as the silver screen spectrum itself.
Allowable Costs
Cinematography, set construction, costume and makeup, sound, and location costs all play a part, and thanks to FTR, can result in reclaimable financial points.
However, costs related to distribution, promotion, or the development of the film's script don't make the cut.
Making a Claim: The Process Unveiled
Lights, Camera, Paperwork
The claim process for Film Tax Relief is a meticulous exercise in financial transparency.
Step-by-Step Clarifications
From preparing detailed cost reports to attaining the signature of a senior company officer, the procedure demands precision. Each step must be confidently navigated, ensuring all necessary documentation is compiled and submitted.
Working with the British Film Institute
The British Film Institute acts as a gatekeeper to FTR, certifying films that meet the scheme's stringent criteria. Cooperation with the BFI is paramount from the outset, as they play a pivotal role in your financial narrative.
Avoiding the Siren's Call of Fraudulent Claims
The Importance of Ethical Filmmaking
While FTR serves as an essential tool for legitimate film companies, it has also, regrettably, been the magnet for fraudulent activities. Understanding and adhering to the legislation is not optional—it's fundamental.
Craig and Carl Rees, 50 and 52 respectively are sentenced to 14 years due to £1 million worth of fraudulent claims. HMRC flagged up fairly instantly upon the claim and the sibling`s case went down the history books as one of the longest prison sentences due to a tax scam.
Read the full story here
How to make a FTR Claim?
You can make a film tax relief claim through a corporation tax return at the end of your tax year. Corporation tax return is a complex process and the supplementary claims section is long and complicated.
Debitam can help you with claiming your production expenses so that you can carry some of the costs to your next production!
Conclusion
Film Tax Relief is a crucial tool for film production companies, providing financial support and incentives to create British cinema that celebrates culture and creativity. It's important to understand the criteria and process of making a claim to ensure ethical filmmaking practices are followed. With Debitam's expertise, navigating the complex world of FTR can be made easier, allowing producers to focus on their artistic vision without financial burdens. So, go ahead and claim your credits, and make your film dream a reality!
