“You never quite believe it’s going to happen, until you actually hear the chancellor stand up and say it,” says Harriet Finney, deputy CEO and director of corporate and industry affairs at the British Film Institute (BFI), of the historic UK independent tax relief, announced last week.
Finney played a key role in building the case to government for the new relief, called the UK Independent Film Tax Credit (IFTC).
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Scroll down to read the IFTC’s journey to fruition
From April 2025, the IFTC will allow eligible films budgeted under £15m to opt-in to claim enhanced Audio-Visual Expenditure Credit (AVEC), at a rate of 53%, on their qualifying expenditure, which equates to around 40% in relief. To be eligible, films will need to be UK qualifying under the existing cultural test, as well as having a UK writer, director or be certified as an official UK co-production.
”It doesn’t matter who you are and where you are in the whole of the film ecosystem, this fundamentally makes an enormous difference to how the whole sector fits together,” she suggests.
Finney talks to Screen about the specific criteria for IFTC, the required theatrical commitments and knock-on impact for the below-the-line workers.
How did you land at the eligibility criteria, of films being budgeted under £15m?
Pact had done research that really forensically looked at budget levels. There needed to be a sweet spot where you could demonstrate good economic return from putting in place increased tax relief.
Ultimately, we needed to do something a little more targeted [than just budget level], so that’s where the UK writer, director or official co-production came in in terms of slightly slimming down the number of productions in that budget level that would be eligible for the 40%.
Can we dig into the detail on the eligibility – films will have to meet criteria set out in a new BFI test. What does that entail?
Some of the detail on that will come from the Treasury. What we wanted to do was design something that was very, very simple. So Section D of the [existing] cultural test already speaks to having a UK writer or director, but it’s not compulsory. Treasury will work through it with us, with the [BFI] certification department, but it’s about keeping it really simple and straightforward, and not introducing lots of different hurdles that people have to jump through. It’s about trying to use the existing infrastructure.
Films will need a theatrical release to access the credit. Will there need to be a specific number of cinemas the film is exhibited in, or length of release to qualify?
It’s exactly the same premise that AVEC was constructed on. There’s a Treasury note to the budget, which has got it set out. It’s quite simple – it just says productions will need to have a theatrical release to qualify. [The wording for AVEC says simply a film must be “intended for theatrical release” but does not detail for how long or on how many screens. Theatrical release is defined by HMRC as ”intended that a significant proportion of the earnings from the film should be obtained by such exhibition. The phrase significant proportion is not statutorily defined; its level will depend on the facts in each case. But HMRC will accept that 5% of total estimated income is a significant proportion the earnings of a film.”]
Another major concern for UK independent producers has been the US streamers’ model of buying up intellectual property rights when funding projects, which stops money going back into the UK production sector down the line. With the IFTC, US streamers and studios will still be able to make use of the credit. How will the credit remain targeted at the UK industry who really needs it?
That’s come up in conversation during this process – how do you make sure you have a properly targeted tax relief? There are a couple of bits and pieces that are relevant. One is people do want choice, and the market is changing, and changes year by year. It would be wrong to do a tax relief now that is limiting when you know there are different models for financing a film that are emerging. The production community is interested in having options and choice. They can have those options and still benefit from the tax relief. The tax relief has these guard rails around UK director, writer, co-production.
Some films have taken US money, like [Searchlight-backed] All Of Us Strangers, but have incubated some absolutely fantastic British talent. We didn’t want to create something that excluded that happening. These are stories for audiences, and these audiences aren’t all in the UK. How do you reach global audiences? We wanted something that is sufficiently flexible.
Claims can be made from April 1 2025 onwards, but there is still a question of cash flowing projects in the meantime. What message would you have for producers still struggling to piece together financing?
We’re not quite there exactly on the process. That’s something we are in conversation about with the Treasury. As soon as we have any details we will share.
Ireland has 90% early payment available with its tax credit. Are there any plans to implement something similar?
The conversation we are having is purely in terms of practicalities of applying. We’ve got a brilliant system, I don’t think they are looking at introducing any other systems.
Some producers have expressed concern film financiers could now reduce their own contributions in-line with the increased credit, which means the IFTC will not benefit UK producers.
That could always potentially happen, but effectively having an enhanced tax relief behind producers gives more leverage and makes it much easier to get other funders on board a project as they have a much greater chance of getting their film 100% funded. The difference first and foremost is films getting made which may not otherwise.
Does the BFI have additional resource to cope with increased tax relief requests?
It needs to work culturally, economically and practically. We have an amazing certification team. We were lucky enough to get some additional funding for that team in the autumn budget, to make sure it is resourced to be able to cope with volumes coming through. We obviously didn’t know in the autumn budget we would have this tax relief, but we made sure we’ve got sufficient funding so we’ve got world-class tax reliefs with a world-class infrastructure.
We have one year’s funding from government, and we will go into the review process on the back of that.
What were the main roadblocks along the way to bringing the relief to fruition?
Quite a long time elapsed from 2016 where we could see what was happening, and to the point where we are today. Some of it is gathering the data and evidence takes time. It also takes time to build consensus across industry – that is probably one of the most powerful things. When you’ve got [Christopher] Nolan advocating for something at the same time you’ve got an independent filmmaker and you’ve got Netflix advocating for it, at the same time as you’ve got a small independent company advocating for it, you’ve got a really good model for a policy intervention and consensus has built across industry. You’ve got a government who, let’s face it, has been very supportive of the sector.
Bectu’s head Philippa Childs has questioned where the measures are to support the freelance below-the-line workforce. What would your response be to her statement?
If there is more production, more stable domestic production, it becomes a proper pipeline and flow of production activity. It will be across the UK, we hope it will benefit all nations and regions of the UK. I hope it will help the freelance having more stability in domestic production. But we know there is more to be done.
How the indie tax relief became a reality
UK producers’ organisation Pact started the conversation about a targeted tax relief for independent film with the industry in 2016, introducing the 40% figure in 2017 alongside its ‘The State Of The UK Independent Film Sector’ report, put together by Olsberg SPI. Over the next few years Pact went on to fund further research on the economic benefit of an indie tax relief that was presented to the UK government and created a steering group led by Pact’s John McVay with producers Nicky Bentham, Julie Baines and Andy Paterson.
Enhanced tax relief to help independent producers was also one of the recommendations of the BFI’s Commission On UK Independent Film, chaired by Zygi Kamasa in 2018.
When Finney joined the BFI in 2018 as director of external affairs and, from 2021, as deputy CEO working with CEO Ben Roberts, she was keen to promote the organisation’s position not only as a cultural body, but as a National Lottery distributor and as a government-supported body, and to “use those two levers for change”.
She says it was the pandemic year of 2020, subsequent industry shutdown and creation of the Covid Screen Sector Task Force that showed how different facets of the industry could come together in a sophisticated way - and at pace. It provided a solid template for managing and responding to the crisis point UK independent film had reached.
The BFI commissioned the Economic Review of Independent Film, published in July 2022, which included the proposal for a tax relief. Pact further worked on this proposal, with Treasury-accredited economists modelling the relief, which was presented to the Treasury and the Department of Culture, Media and Sport (DCMS).
But this proposal needed to be turned into reality, which is where the BFI’s role as a government body proved invaluable.
“We have this curious position where we are trusted by government, trusted by industry, we can be a neat independent broker,” says Finney. “We have very strong relationship with government, that is very cross-departmental, which for this particular issue around the independent tax relief was absolutely critical. And DCMS is our home department, who we meet with two or three times a week, from secretary of state level down.”
The impact of the Hollywood strikes on UK production in 2023 – which saw a shrivelling up of work in the UK – was a pivotal turning point. “There is a moment where you flick the switch in terms of it becoming absolutely critical,” says Finney.
The Culture, Media and Sport (CMS) select committee inquiry into British film and high-end TV provided a platform for the likes of Film4 and BBC Film directors Ollie Madden and Eva Yates to state their cases for the relief publicly, while further work was going on behind closed doors.
The BFI and the prime minister Rishi Sunak’s office, 10 Downing Street, jointly hosted a film industry event in December. The BFI took this as a chance to paint the picture of the UK film industry for government, with an exhibit including Barbie costumes from UK costume designer Jacqueline Durran alongside Aardman puppets and puppeteers, and guests including independent filmmakers at the start of their careers, alongside more established figures including director Gurinder Chadha, who Finney recalls “spoke absolutely brilliantly” at the event.
The conversation with the government continued into early 2024 with the need for an indie tax credit a key topic of discussion at the BFI Fellowship dinner for Christopher Nolan on February 14, with Sunak in attendance. The BFI also convened a group of industry figures, filmmakers and producers to provide further evidence to the government and Sunak at 10 Downing Street, each explaining how a change in the tax relief could provide an opportunity for economic growth and could help to build the UK’s talent base. Further meetings between producers, the DCMS and secretary of state Lucy Frazer also took place that week.
The period of determined, focus activity culminatd in the announcement of the IFTC on March 6. But the conversation is ongoing. “There is still work to be done,” says Finney.
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