The Recent Changes in UK Film Tax

In a recent podcast episode, Giles Alderson and Dom Lenoir chat with Film Tax expert Sam Ampah. They delved deep into the UK film tax relief system, shedding light on the recent changes.

We have broken down the key points from their chat, and the implications for filmmakers.

Understanding the Numbers:

The headline rate of the film tax relief stands at 53.3%, but Sam clarifies that “once you start bringing in the calculations, that’s when it goes from 53%,” due to the incorporation of a notional tax charge at 25%, which is the corporation tax amount.

Notional Tax Charges:

Explaining the concept of the notional tax charge, it becomes evident that the government intends to tax the amount it provides at a corporation tax rate of 25%. As Dom puts it, “It disappears before it even gets to you.” So, despite the seemingly high headline rate, the effective relief may vary.

Hypothetically Speaking:

For a simplified understanding, let’s consider a hypothetical million-pound budget for a UK production, using an all-UK production team. The calculation involves capping the total core costs at 80% and applying the tax relief rate accordingly. The result? Returns are estimated at around 31.5% to 32%.

Important Considerations:

While the increased tax relief is a step in the right direction, filmmakers will still need to navigate cash flow challenges, particularly regarding the timing of claims. Delays in processing claims are not expected, but if there are delays, it could mean that even with substantial relief, funds may not be immediately available for production expenses.

Boosting the Industry:

The enhanced tax relief aims to boost the UK film industry, mitigating risks associated with investment and production. However, concerns linger about potential price inflation and regulatory oversight, emphasising the need for careful monitoring.

Independent Film Tax Credit:

In addition to the independent film tax credit, discussions extend to the Audio Visual Expenditure Credit (AVEC) and the potential reinstatement of schemes like the Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS). These measures could further improve the industry by addressing funding gaps and encouraging investment.

While the changes in UK film tax relief are welcomed by stakeholders, continued vigilance and advocacy are crucial. With a clearer understanding of the intricacies involved, filmmakers can leverage these incentives while ensuring the sustainable growth of our industry.

Find out more about our chat with Sam here.

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