Producers alliance Pact has played a key role in lobbying for the UK Independent Film Tax Credit (IFTC) that was announced in the budget yesterday by chancellor Jeremy Hunt.
Pact CEO John McVay tells Screen how the IFTC, which offers an effective 40% tax relief for UK-qualifying films costing up to PS15m, was secured and how it will work in practice.
What is your reaction to the news today about the UK Independent Film Tax Credit?
I’m absolutely delighted. This is a journey that we began in 2017. We proposed a 40% tax credit then for films that fell within a certain range of budgets. We had a good deal of success with Treasury and HMRC but the project was closed because [the UK] hadn’t yet left the EU. [The government] was concerned about an EU investigation into state aid. The UK was actively negotiating the settlement agreement with the EU at the time. People were worried that if we managed to get an enhancement for film, that would have upset the French industry, and then they would pushed for an EU investigation.
Obviously, state aid was a big issue in the settlement agreement. It was killed off then. When
settled, and Ben Roberts came into BFI
, and a new attitude there, we put pressure on. [the EU exit]: “Look Ben, you’re biggest problem isn’t inward investments or celebrating inward investments, your biggest issue is your indigenous film industries.” In 2022 [as CEO] released a report about the economics and production of independent films that was very helpful. Since then, I’ve been working hard on it. We didn’t release it, but we used it to rally everyone around the cause including all of the Americans who wrote support. It’s a testament to both them and the industry that we were successful in convincing not only the secretary-of-state but also the Prime Minister that this intervention was urgently needed. [We said]Yes. We had a large round table with the Prime Minister. We did the whole thing with Treasury. We did all of the work with the team of the Prime Minister and [the BFI] Lucy Frazer. This led to a roundtable discussion with the Prime Minister a few months ago, where serious people from the
sector basically said, “This is a problem that exists right now.” You have to do something.”
Why was it such an existential problem for the industry?
I did a quick survey two weeks ago for the Treasury. It showed that only six films out of the 40 that were to be produced by good independent feature film production companies in the UK this year were going to take place there. All the films were coproductions. The films had nothing to do with Italy. They were made in Italy because they could afford it. This will hopefully stop this trend and bring these British stories back to Britain. It will also allow workers to return to work on British films. If we had a viable domestic industry, many of those people could have found work on American films and dramas. It’s called the Independent Film Credit. Will studios and streaming services be able access it? If they want a British producer to work with them on an English story and they want the money, then why not? Or if they wish to make a film in the UK that meets the criteria, then great. We have no problem with this. This is people getting jobs. We want to keep a creative workforce that is brilliant. The British indie film industry will be the biggest beneficiaries, as we don’t produce PS250m films. It’s a very targeted initiative – the main benefit will go to British independent films. But if Netflix wants to make the new [culture secretary]Inbetweeners[film] in the UK, that’s great.
If they give it a theatrical release… A film has to have a theatrical release to access this new credit. This detail will be worked with the BFI. That is a little premature. The main thing right now is that my members are scrambling to close their finances and they have an extra 15% in their pockets. Now you might be able to turn around and go, “You know what, I’m not going to give you everything for that 5% share – because I’ve now got an extra 15% in my pocket, I’m going to do it differently.”
What kind of qualifying cultural criteria will UK films have to meet to access this?
It’s an enhancement to the current cultural test. It’s an enhancement to the current cultural test. You will need to meet another cultural threshold if you want the 40%. It can be either a British director or a British author, or it can be an official coproduction. When we ran an analysis on that
, we found that every British film that has been made over the past five years qualified.
They’re not significant hurdles to overcome. But they focus it. One of our main arguments was that the British indie sector is a talent incubator that drives inward investments. Christopher Nolan, John Boyega and Edgar Wright, all of the talent who are now bringing high budget films to the UK, started in the independent sector. We are destroying R&D if we don’t have a UK indie film industry. We also think that since we can make films at PS10m which are commercially successful, this will not only help talent development and incubation but it will also give us the opportunity to make films with a chance to make some money.
Maybe. Our will soon be in Cannes. If they are going there and they’re walking into the room with 40% in their pocket rather than 25% or actually 20%, they are more attractive.
This is huge news for the industry.
This could be transformational for our independent film sector. We’ve been working hard on this. We’ve done all the research and evidence, and we’ve worked with the government and industry from last summer to January of this year. This is what led us to our meeting in Number 10. The government has done well here. We believe this is the best way to bring our production sector up the league tables and back to its feet.
