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What is Film Tax Relief and How Do You Claim It?

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There’s no question that British film, television and cinema has had a major influence on the international arts scene throughout history. Since the earliest beginnings of moving-pictures, many great producers, performers and other film-workers have helped establish Britain as a leading force within the world of visual entertainment.

And the statistics confirm this.

According to a study by video production company Social Films, in 2022 total spending in the UK film industry was £1.97 billion, and was the largest media market in Europe taking in £97 billion of revenue. 

It also created 86,000 jobs in 2020 and was worth an impressive  £12.6 billion to the UK economy in 2019. And it’s not showing any signs of stopping, as since 2014 the film industry has grown by a staggering 35%.

UK film is absolutely booming!

And the government knows it. As an unusually supportive measure for the arts, that’s quite refreshing to see, HMRC actually offers quite generous tax incentives for UK film production companies (FPCs).

What is film tax relief?

To support the UK film industry HMRC allows FPCs to reduce their corporation tax by claiming a tax deduction on their core costs. This is a much-needed financial aid, as the financing of film making is often difficult and precarious until the film is released and starts generating revenue. Without this type of tax-relief, many FPCs would struggle to operate. 

How much can you claim?

Provided your costs meet the qualification criteria, a tax-relief of 25% can be applied to whichever is lower of either: 80% of total core costs, or the total amount of UK core costs. This will then reduce your corporation tax.

There is no limit to the amount that can be claimed.

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Who is eligible to claim film tax-relief?

In order to claim the relief your company must meet certain criteria:

  • Your film must have been certified as British by the British Film Institute
  • Your film must be intended for theatrical release
  • A minimum of 10% of the core costs must be directly or indirectly incurred by activity in UK
  • Your company must be responsible for all of the following components of the film project: pre-production; principal photography; post-production; delivery of the completed film
  • Your company must be actively involved with: planning and decision-making; directly negotiate; contract and pay for rights, goods and services

As the first criterion states, you are required to pass a ‘cultural test’. This involves being certified as British by the British Film Institute and or by an internationally agreed co-production treaty.

If your film successfully passes the cultural test the British Film institute will issue you with either; an interim certificate for work that is uncompleted, or a final certificate if production is complete. The Department for Digital, Culture, Media and Sport has directed the British Film Institute to manage the certification and qualification of British films.

Fore more information and to apply for a cultural test visit the BFI’s webpage

How to claim Film Tax Relief

You can claim tax relief for a film project when you complete your company tax return. To do this, you will have to calculate the additional deduction your company is due, as well as any payable credit your company is due.

You are also required to show evidence of to support your claim which includes:

  • A British cultural certificate issued by the British Film Institute. (If you have been issued with an interim certificate, then after the film’s completion you must send the final certificate.)
  • Statements as proof of core costs separated into UK costs and non-UK costs
  • A categorised breakdown of costs.

Claims can be made, amended or withdrawn up to one year after your filing date. In certain circumstances, late claims may be accepted. 

For a lengthy and detailed explanation about the above information on film tax-relief you can see HMRC’s official Film Production Company Manual. Or speak to a Crunch advisor who will be happy to help.

Creative industry tax-reliefs for other types of moving-picture and broadcast media 

In addition to tax-relief for film production, HMRC also offers tax-reliefs for other forms of moving-picture media production. These include high-end television (HETV), animation and children’s television. 

As with Film production, tax relief for these types of productions is available on whichever is lower of between either 80% of the total core expenditure or the actual UK core expenditure. And there is also no cap on the amount that can be claimed. If you make a net-loss, all or part of your loss can be surrendered for a 25% tax credit. 

Also like Film production tax-relief, you can make your claim for these other creative industry tax-reliefs when you file your self-assessment tax-return. Claims for creative industry tax-reliefs are amendable or can be withdrawn up to one year after the company’s filing date.

All of these have slightly different conditions for eligibility and means of access. So let’s look at each one individually. 

HETV

Television programmes projects that are classed as ‘‘high-end’’ by HMRC are eligible for tax-relief. If they meet the following criteria:

  • Are either a documentary, drama or comedy 
  • Slot length is 30 minutes in relation to the programme
  • Are made for broadcast to the public, either online or terrestrial
  • UK based activity related core costs are a minimum of 10%
  • Core costs are over a minimum of £1 million per hour of slot length
  • Have been certified as British by the British Film Institute
  • Your company must be responsible for all of the following components of the film project: pre-production; principal photography; post-production; delivery of the completed film
  • Your company must be actively involved with: planning and decision-making; directly negotiate; contract and pay for rights, goods and services

To learn more about qualification criteria and programmes that are excluded, read HMRC’s manual on HETV tax relief.

Animation

Animation projects are eligible for tax-relief. If they meet the following criteria:

  • A minimum of 51% of total core costs are spent on animation
  • UK based activity related core costs are a minimum of 10%
  • Are made for broadcast to the public, either online or terrestrial
  • Have been certified as British by the British Film Institute
  • Your company must be responsible for all of the following components of the film project: pre-production; principal photography; post-production; delivery of the completed film
  • Your company must be actively involved with: planning and decision-making; directly negotiate; contract and pay for rights, goods and services

To learn more about qualification criteria and animation productions that are excluded, read HMRC’s manual on animation tax relief. 

Children’s Television 

Children’s television programmes are eligible for tax-relief. If they meet the following criteria:

  • The expected primary audience is under 15
  • UK based activity related core costs are a minimum of 10%
  • Are made for broadcast to the public, either online or terrestrial
  • Have been certified as British by the British Film Institute
  • Your company must be responsible for all of the following components of the film project: pre-production; principal photography; post-production; delivery of the completed film
  • Your company must be actively involved with: planning and decision-making; directly negotiate; contract and pay for rights, goods and services

Provided the prize does not exceed £1000, programmes like quizzes or game shows etc. Quizzes might also qualify for children’s television tax-relief. Programmes will be treated as one programme if they are commissioned together.

To learn more about qualification criteria and children’s television productions that are excluded, read HMRC’s manual on children’s television tax relief. 

In summary, the tax-reliefs available for film production and other related kinds of media productions have become a valuable source of funding for companies operating in this industry. It’s important for businesses who face challenges around film financing to take advantage of the opportunities offered by HMRC to help the British cultural sector continue to thrive. If you have questions about, or require more clarity on claiming film tax-relief, then our friendly advisors are ready to help.

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James Waller
Content Specialist
Updated on
December 22, 2023

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