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Details revealed about the UK’s new 40% Independent Film Tax Credit

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Source: Adobestock composite

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Details have emerged from the UK government on the long-awaited enhanced tax support for UK indie films, termed the UK Independent Film Tax Credit (IFTC), unveiled as part of chancellor Jeremy Hunt’s spring budget today (March 6).

Under the IFTC, eligible films will be able to opt-in to claim enhanced Audio-Visual Expenditure Credit (AVEC), at a rate of 53%, on their qualifying expenditure, which equates to around 40% in relief.

To be eligible for the IFTC, films will need to have production budgets (excluding marketing and distribution) of up to PS15m. There is no lower budget limit.

Films will also need to meet criteria set out in a new British Film Institute (BFI) test, with the expectation films will need to meet at least one of the following conditions: have a UK writer; a UK director; or; be certified as an official UK co-production.

Productions must have started principal photography on or after April 1 2024, and only expenditure incurred on or after April 1 2024 can be claimed.

If claiming the IFTC, separate claims for the newly-introduced 5% visual effects and animation uplifts cannot be made, because the ITFC rate of 53% has been specifically calculated based on independent film sector trends. The IFTC is not available for TV programs. The IFTC is only available for theatrical releases. The BFI will review film budgets in order to certify that IFTC film budgets meet the required budget. If a film’s budget 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.

Claims can be submitted to HMRC from April 1 2025 onwards, in respect of expenditure incurred from April 1 2024, provided a film began principal photography after April 1 2024.

UK introduces 40% tax relief for films budgeted up to PS15m in bid to reignite indie sector

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