The Treasury has announced additional support for ‘independent films’ that can currently claim the Audio Visual Expenditure Credit(AVEC): the Independent Film Tax Credit (IFTC). Films that meet the IFTC qualifying criteria will be eligible for a higher rate of expenditure credit on their qualifying expenditure. The basic rate of credit under AVEC is 34%- independent films will receive a rate of 53%.
To qualify for the IFTC, a film must pass a new test administered by the British Film Institute. The test is intended to target films that have a projected core expenditure of £15 million or less. The test is also expected to require that either key talent on the film, such as the director and writer, must be from the UK, or the film must be an international coproduction.
The amount of credit that a company will be able to claim under this scheme will be capped at the maximum amount that would be available for production with the core expenditure of £15 million.
Films that do not qualify as independent films can continue to claim AVEC at the basic rate of 34 %, or the uplifted rate of 39% for animated films. Companies will not be able to claim both the IFTC and the announced additional relief for visual effects expenditure in respect of the same film.
The higher rate is available on expenditure incurred from 1 April 2024, for films which commence principal photography on or after that day. Claims can be made from 1 April 2025
Additional tax relief for expenditure on visual effects
As announced in the Autumn Statement 2023, and following a call for evidence, the government will give additional tax relief to visual effects costs in films and high-end TV. Under the Audio-Visual Expenditure Credit, visual effects costs will receive a tax credit at a rate of 39%. The 80% cap on qualifying expenditures will also be removed for visual effects costs. The changes will take effect from 1 April 2025
A consultation will be published shortly on the types of expenditure that will be within the scope of the additional tax relief, so watch this space.
