The UK’s Labour government has given the go-ahead to the eagerly anticipated Independent Film Tax Credit (IFTC), which was confirmed by chancellor Rachel Reeves and culture secretary Lisa Nandy on the eve of the BFI London Film Festival today (October 9).
The BFI certification unit will begin accepting applications from October 30, the date on which the IFTC will now take effect after the formal ‘statutory instruments’ are laid by the government.
The BFI’s deputy chief executive Harriet Finney has confirmed the BFI has hired five additional staff to help with demand. Productions qualifying for the IFTC must have started principal photography on or after April 1, 2024, and only expenditure incurred on or after April 1, 2024 can be claimed.
The IFTC, officially known as the enhanced audiovisual expenditure credit for low-budget films, is aimed at films with a total core expenditure, or production budget, of up to £15m. They can now benefit from an enhanced credit of 53%, which equates to an actual relief of just under 40%, on up to 80% of qualifying expenditure.
Productions must meet the terms of the BFI’s existing cultural test and have a UK writer or director, or be certified as an official UK co-production.
Those productions with a total core expenditure of up to £23.5m can also qualify for the IFTC; however, they can only claim the IFTC up to a maximum of 80% of £15m of the UK qualifying spend. Policymakers have identified £23.5m as the tipping point where it becomes more advantageous to claim the standard rate of AVEC on a film’s total core expenditure.
The standard AVEC has a headline credit rate of 34% and 25.5% in actual relief, capped at 80% of core expenditure. It is not yet clear whether the 80% cap will be removed for VFX costs claimed within AVEC, as proposed in the former Conservative government’s spring budget.
The IFTC was announced under the last Conservative government as part of its March spring budget, and went through into the Finance Act in May, after years of lobbying by producer trade body Pact, the BFI and the independent film sector, amid rising costs, a challenging landscape in the face of deep-pocketed streamers and dwindling avenues for investment for UK independent producers.
Since the March budget, a surprise July general election was called and a new Labour government came into power, delaying ratification of the IFTC.
The Irish government also announced last week that Ireland will receive its own boosted tax incentive of 40% for films budgeted under €20m (£16.7m), with further details to be announced later this week.
Hot topic
The introduction of the indie tax credit was on the lips of every delegate at the Screen’s ‘Future of UK FIlm’ summit in London on September 24. Producer after producer repeated how crucial it was for the UK to have a financial initative aimed specifically at lower-budget films.
Nicky Bentham, producer at Neon Films and co-chair of trade body Pact’s film producers group, was part of the Pact group who, in 2017, first proposed a 40% tax relief figure for independent film. She explained the IFTC had encouraged her to restructure a project to shoot in the UK that she had been planning to shoot abroad, due to financing being too difficult out of the UK.
“I was looking at how to make it as a co-production, out of necessity rather than a specific need for a location or country,” she said. “Now, I’ve brought that project back to be a completely UK film. It’s still very difficult financing. It’s not just the tax credit that will be transformative to producers, but hopefully the additional finance that it’s going to attract into the sector – financiers from around the world are now looking at the UK as a viable place to make independent film.”
She added that for producers keen to co-produce, it has also been transformative: “For a long time, co-producing with the UK seemed like it was more effort than it was worth. International producers are getting in touch now saying there is a way to do this in partnership.”
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