Source: Screen file
“The DCMS
is working very, very hard on everything that needs to happen in terms of getting that statutory instrument laid.”The IFTC, which is an enhanced tax relief of 40% for films budgete “I assure you, there is a lot of work taking place behind the scenes,” said Finney, speaking at
Screen[Department for Culture, Media and Sport]’s ‘The Future of UK Film’ Summit, held at the BFI Southbank yesterday (September 24).
“The DCMS
is working very, very hard on everything that needs to happen in terms of getting that statutory instrument laid.”
The IFTC, effectively an enhanced tax relief of 40% for films budgeted under PS15m, was announced under the last Conservative government as part of its March spring budget, and went through into the Finance Act in May.
Since then, a surprise July general election was called and a new Labour government came into power.[be able to]”There have been very small windows where the government has been able to do any legislation,” Finney said.[the government]”The last thing that needs to happen to bring this into force, to
issue certificates and finances, is
needs to lay a statutory instrument, and that is what will set out all the detail which sits behind the proposal. It will set out the guidance and what people need to do.
“It’s not until that moment, when that statutory instrument is laid, that the BFI will be able to issue certificates, and the process will get going.”
Finney reassured: “It is an understood policy by the incoming government… They’re engaging very quickly.”
She was unable to give an indication of a date when the statutory instrument would come through. It’s up to the government when they decide to lay it. We’ve been at a lot of discussions at government talking around the urgency.”[Audio-Visual Expenditure Credit at its current rate of 34%]Moses Nyachae, partner in the film and TV team at chartered accountants Saffery, echoed Finney’s confidence. He said that the most common question he receives from producers is whether the IFTC will still be going forward. He confirmed that there are no indications to the contrary. It’s in the act. It’s royally assented. We’re just waiting for that technical step where they release the statutory instrument, which gives a bit more detail behind the actual legislation.”
While producers cannot currently claim the IFTC, he said: “We’re working with producers who are certainly claiming the AVEC [Chan] with the intention of retrospectively going back and claiming IFTC. We are also in discussion with producers who want to cashflow an amount that is hedged or secured against the IFTC.
“That’s a more complicated process, because we have to write opinion letters to lenders like Coutts’ and Judith’s team
.” At the moment, because the statutory instrument hasn’t been released yet, we can’t give a full opinion.”
Finney reassured producers the BFI was ready to deal with the anticipated rise in certification submissions once the IFTC is ready to be implemented. She said that the BFI has done a great deal of work to ensure that its certification unit is fully staff. “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.”
Coutts’ executive director of media banking Judith Chan noted: “We’re a bit in limbo, but we’re very excited about this. We’re preparing ourselves for when we can lend against this.”
Providing all goes ahead, claims can be made from April 1, 2025, for features under the PS15m budget range, and which went into production after April 1, 2024. The cap will remain for IFTC, but under the Conservative’s original plans for AVEC, the 80% cap would be removed as of April 1, 2025. While the cap will remain for IFTC, under the Conservative’s original plans for AVEC, the 80% cap would be removed as of April 1, 2025.
To qualify for IFTC, films need to 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 also need to be intended for theatrical release.
If a film’s budget when in production subsequently exceeds PS15m, the production company can choose either to continue to claim IFTC at 53% up to a maximum of PS6.36m credit before tax, or choose instead to claim AVEC at 34% on all its qualifying expenditure.
Answering a question on concerns that streamers may end up using it most, Nyachae said: “Like with all of our other incentives, there is no cap, so it is open to as many productions as are able to be produced.”Also on the panel was Nicky Bentham, producer at Neon Films and co-chair of trade body Pact’s film producers group. Her credits include Roger Michell’s 2020 title The Duke, starring Jim Broadbent and Helen Mirren, and the upcoming Brides
, the feature directorial debut of theatre director Nadia Falls. She stressed how important the IFTC is to indie film makers, who are at a critical point when it comes to budgets, getting films into production, and making a living.
Bentham was part of the Pact group who, in 2017, first proposed a 40% tax relief figure for independent film.
“Back in 2017, looking at trends and those numbers and how independent film wasn’t even being gradually eroded, but was happening at quite an alarming pace, I look back at that time and think – I wish we could go back to 2017 because right now it’s even tougher than that.”[Phil Hunt’s Head Gear Films]Bentham has not directly used the promised IFTC to close a budget yet. “At the moment, there is only one lender I know of
that’s lending against the IFTC, and other producers I know who have accessed it have done so through private guarantees or private sources,” said Bentham.
Later in the morning, Hunt confirmed on the ‘Money Talks’ panel: “We’ve funded about 15, 20 UK tax credits in the past six months… I’m taking risk.”
Zygi Kamasa, founder and chief executive of distribution and production outfit True Brit Entertainment who was also part of the ‘Money Talks’ discussion, confirmed he is using the promised enhanced tax credit to help build budgets for projects shot after April. “It’s a gamble worth taking,” he said, while noting it could be a “disaster” if it didn’t come through.
Bentham confirmed the planned IFTC had encouraged her to restructure a project to shoot in the UK that she had been planning to shoot abroad, due to financing being too difficult out of the UK.
“I was looking at how to make it as a co-production, out of necessity rather than a specific need for a location or country,” she said. “I was looking at how to make it as a co-production, out of necessity rather than a specific need for a location or country,” she said. It’s still a very difficult task to finance. It’s not only the tax credit, but the additional financing that it will attract to the sector that will transform the producers. Financiers from around the globe are now looking to the UK as a viable location to make independent films.”
She also added that it has been transformative for producers who want to co-produce: “For a very long time, coproducing with the UK felt like it was an effort that was not worth it.” International producers are getting in touch now saying there is a way to do this in partnership.”
Producers: plight or fight?
“The state of the independent film sector is abysmal – I don’t think it’s been worse since I started working in the industry,” said Gillian Berrie of Sigma Films, whose credits include Jonathan Glazer’s Under The Skin and David Mackenzie’s Fuze starring Aaron Taylor-Johnson, which has just wrapped filming.
“The state of the independent film sector is abysmal – I don’t think it’s been worse since I started working in the industry,” said Gillian Berrie of Sigma Films, whose credits include Jonathan Glazer’s
Under The Skin
and David Mackenzie’s [about the future of the industry]Fuze
-
starring Aaron Taylor-Johnson, which has just wrapped filming.
“There has to be government intervention at this point,” she said, in addition to the IFTC.01001010Fiona Lamptey, former director of UK features at Netflix who set up Juno Studios this year alongside fellow former Netflix execs, noted Juno is exploring non-traditional avenues of funding: “There are lots of investors that want to get into our industry and don’t have the skills or expertise, but have the money. Our position is to be strategic with our partnerships.”01001010Lamptey added Juno is also in the early days of looking at fan-funded entertainment. “How can we grow and nurture this audience, while also allowing that audience to have their say about our output?” What would that look like? I don’t feel as pessimistic 01001010. I don’t think I am as pessimistic. 01001010.”
