Corporation Tax

Film production company tax credits

Produced by Tolley
  • 16 May 2022 13:22

The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Film production company tax credits
  • Introduction
  • Qualifying companies
  • Conditions for the film tax relief
  • Intended theatrical release
  • British film
  • UK expenditure condition (CTA 2009, s 1198)
  • Additional deduction
  • Used or consumed
  • Surrenderable Loss
  • More...

Film production company tax credits

Introduction

Finance Act 1996 introduced a special regime for film production companies, now included in CTA 2009, ss 1188–1216. In addition, the legislation provides for qualifying films to receive an additional tax deduction in respect on the production company's expenditure on production of a film. This enhancement is up to 80% of qualifying expenditure on the film production.

Provisions have been announced in Autumn Budget 2021 to allow film production companies to claim film tax relief for films that were initially intended to be released in cinemas, but which are instead put on streaming services as long as they meet the criteria for high-end TV tax relief, thereby ensuring that relief is not lost should a company decide to change their distribution method. It will apply to any new film commencing production on or after 1 April 2022, and to ongoing productions that have not completed principal photography by 1 April 2022.

This additional deduction can be set off against future taxable profits or, if the company wants to, be surrendered in exchange for a payment to the company by HMRC. This payment is worth up to 20% of the film production costs. As indicated below, it will nearly always be beneficial to make the election and surrender the loss and receive the payment.

Such has been the success of the regime that the legislation has been largely replicated in the separate tax regimes for companies producing television, animation and , children’s television programmes. See the Television tax

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