This week, the government announced, at the London Film Festival, a set of initiatives designed to boost the UK’s creative sector – which could be genuinely exciting news for independent filmmakers and production and visual effects craftsmen. It might even benefit you.
One of the most significant announcements is the introduction of the Independent Film Tax Credit (IFTC). This scheme aims to empower independent filmmakers by providing a significant tax break on qualifying productions. Here’s how it works:
- Enhanced Relief: Films with a budget under £15 million can opt into the IFTC, receiving a hefty 53% tax relief on qualifying expenditure. This translates to a net reduction of almost 40% after corporation tax.
- Eligibility for All: To qualify for the tax break, films must meet a “cultural test” set by the British Film Institute (BFI). This ensures the story has a clear connection to the UK, with at least one of the following criteria being met: a British writer, a British director, or official co-production status with the UK.
- Implementation Timeline: The IFTC was introduced in the Spring 2024 budget and applies to productions starting principal photography on or after April 1st, 2024. However, filmmakers will be able to claim tax relief on qualifying expenses incurred from April 1st, 2025 onward.
This initiative directly addresses concerns raised by industry bodies like Pact, who highlighted the struggles of independent producers competing with hefty studio and streamer investments. With the IFTC, UK filmmakers now have a valuable tool to create diverse and thought-provoking stories that might not otherwise receive the green light.
The UK’s creative visual effects industry is also being supported by the offer of additional tax relief for VFX work carried out in the UK. Here’s what’s changing:
- Increased Relief Rate: The relief for qualifying visual effects expenditure has been bumped up to 39%, resulting in a net rate of nearly 30% after tax.
- No More Caps: Previously, there was an 80% cap on qualifying costs under the Audio-Visual Expenditure Credit (AVEC) for visual effects work. This cap has now been scrapped, allowing productions to claim tax relief on the full amount of their UK-based VFX costs.
- Effective Date: These changes come into effect in April 2025, giving VFX companies and studios time to prepare and adjust their workflows.
The physical estate of the film industry will also benefit – film studios across England will now benefit from a 40% reduction in business rates from April 2024 to March 2034. This significant cost relief will help studios invest in infrastructure and talent, further bolstering the industry.
These initiatives are a mixture of Conservative initiatives from the last budget, topped up by Labour, so there is economic, rather that political purpose in them, to safeguard the UK’s creative industries – hoping to nurture new creative talent to pull in overseas investment.
What that means for you, if you work in film or production, is that you can hope for the green light on more productions, either of your own or of partners. But, there will be a list of criteria to satisfy and financial reporting to be done, to make sure you qualify for the extended tax relief.
What you need, of course, is some financial advice from people who know your business. So get in touch and let’s work out how to get that film made.
