Department for Culture Media and Sport

tax relief

Why tax relief is important for British film
Tax relief helps to encourage home-grown UK films and film production and maintains the industry’s creative and technical skills.

New tax relief for British films
HM Treasury provides tax incentives to makers of culturally British films.

The new tax relief, announced in the Budget offers qualifying films:

  • (With production budgets up to £20 million) a guaranteed minimum benefit worth 20% of qualifying production costs where they spend 80% or more of their budget in the UK
  • (With production budgets of £20 million and above) a benefit typically worth 16% of qualifying production costs where they spend 80% or more of their budget in the UK

Details of the new tax relief are available from HM Revenue and Customs website.

30 September 2007 was the cut-off old film tax relief

The position on the cut-off of the ‘old’ film tax relief is as follows.

  •  30 September 2007 was the cut-off in the Finance Act 2006 for acquiring a film that completed before 1 January 2007 and claiming relief on that acquisition, i.e. acquisition expenditure incurred after that date will not count.
  • By the same token, production expenditure incurred after 31 December 2006 would generally not count either as that would then be an "unfinished" film and would come under the new relief.
  • However, transitional regulations do provide that films that were unfinished at 1 January 2007 and fail the new 2007 cultural test remain in the old rules (under the 2006 cultural test) and can continue to claim for production expenditure under S.42.  For these films only, the 30 September 2007 deadline is extended to 31 March 2008 i.e. someone acquiring such a film can claim for any acquisition expenditure incurred by then.

This table summarises the position:

When was the film completed? When did filming start?  Does it pass the 2007  cultural test? Does it pass the April 2006 cultural test?  Relief available  Cut-off point for relief on acquisition expenditure
before 1/1/07 before 1/4/06 n/a n/a S.42 & S.48 30/09/2007
before 1/1/07 from 1/4/06 to 31/12/06 n/a yes S.42 30/09/2007
after 31/12/06 before 1/1/07 no yes S.42 31/03/2008
after 31/12/06 before 1/1/07 yes n/a new relief n/a
after 31/12/06 after 31/12/06 yes n/a new relief n/a

 

For further detail on these reliefs, or the previous sale and leaseback scheme please contact HM Revenue and Customs or seek specialist legal or accounting advice.

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