As promised, here’s the next supplement to our budget blog series.
There were many important announcements in the Spring budget 2024, including significant support for the creative industries over the next five years via the UK Independent Film Tax Credit.
Within this blog we’re covering the changes for film and creative industries, ably supported in the North East by our friends at Generator, North East Screen and We Are Creative, amongst others.
Firstly we’ll cover a fantastic regional update.
Great news for Sunderland
Did you know that the creative industries employ 2.4m people across the UK and in 2022 contributed £125bn to the economy?
It’s big! And not everyone may realise this, but Sunderland is working well towards its stated ambition of being the ‘Hollywood of the UK’.
FullwellCain Studios, a JV incorporating Fulwell73, confirmed plans for the development of crown Works Studios in Sunderland, incorporating a huge film industry hub and 20 premium sound studios that will make it one of the largest complexes in Europe.
Completion is due by 2027 and is expected to create not far of 10,000 new jobs. This is tremendous, game changing news for the North East.
This is supplementary to the already confirmed Shipyard Studios in the area. Both should be able to take advantage of the 40% relief on gross business rates for eligible film studios.
Great news, and kudos to Sunderland City Council for their vision and tenacity in helping this project move forward.
As a Leeds United fan though, I’d question the origin of Fulwell73’s name. If you know you know!
You can read more, and get some music industry name drops, over on Fulwell73’s site.
UK Independent Film Tax Credit Announced
There’s more! The announcement was timed for Budget Day, and coincidence or (probably) not, a new UK Independent Film Tax Credit (IFTC) was announced that day. So what’s that about?
The announcement was important enough, and detailed enough, to warrant it’s own ‘technical note’ supplement in the Treasury budget documents.
It’s great news for – as you might guess – small UK based independent film producers, with an option to claim enhanced Audio-Visual Expenditure Credit (AVEC), at a rate of 53%, on their qualifying expenditure.
How does the IFTC work?
There are, of course, constraints of eligibility, and the credit will need to be balanced off against any annual investment allowance or first year allowance.
- The maximum production budgets (excluding marketing and distribution) is £15 million.
- The film must have a UK writer or a UK director or be certified as an official UK co-production.
- Qualifying productions must start principal photography on or after 1 April 2024. Only expenditure incurred on or after 1 April 2024 can be claimed.
- Separate claims for the visual effects and animation uplifts cannot be made. The IFTC rate of 53% takes into consideration independent film sector trends.
- The IFTC will not be available for TV programmes. Productions will need to have a ‘theatrical release’ to qualify.
- The IFTC will be an optional enhanced tax credit for productions that already meet the conditions of the Audio-Visual Expenditure Credit (AVEC).
The Audio-Visual Expenditure Credit (AVEC) conditions include (but are not limited to):
- Productions must be certified as culturally British by the BFI.
- They must be made by a UK production company.
- At least 10% of the core expenditure must be used or consumed in the UK.
Calculating the IFTC
Calculating the IFTC will be similar to AVEC calculations on ‘core expenditure’ – expenditure on production activities. As an example:
- The IFTC can be claimed on up to 80% of core expenditure or (if some is non-UK expenditure) the amount of UK core expenditure.
- Let’s say there’s £8m of qualifying core expenditure:
- 80% of this is £6.4m
- Multiply this by 53% for ‘above the line’ credit, gives us £3.392m
- This is then subject to Corporation Tax, and any other tax liabilities must also be offset before the cash credit is released.
- At 19% corporation tax, this could release £2.748m cashback, at 25% it’s £2.544m
Well worth it if you’re in that field. Claims can be submitted from April 2025, must be accompanied by the (now fairly standard) additional information form and also accompanied by the BFI certificate. Any claims will of course be checked before any pay-out.
Need help navigating the IFTC?
Is anyone an expert in the IFTC? Not yet, no-one has yet completed a genuine application, but you can bet your boots Blu Sky will keep well on top of both the regulations and practicalities here.
Any questions? Please just give us a shout!
