Companies that produce films (including television and video productions) are subject to special tax rules (see part 15 of the Corporation Tax Act 2009) which determine how the taxable profits of the film-making activities are to be calculated and how any losses may be applied.
These rules apply to all film production companies whether or not they are producing films intended for release in the cinema.
Some films are eligible for Film Tax Relief (FTR). This relief can increase the amount of expenditure that is allowable as a deduction for tax purposes or, if the company makes a loss, can be surrendered for a payable tax credit.
The films that qualify for the relief are British films that are intended to be shown commercially in cinemas and of whose total production costs at least 25 per cent relate to activities in the UK.
Film production companies can opt out of these rules if they wish. Their films will not then be eligible for the additional relief for British cinema films.
A film is British for these purposes if it meets a 'cultural test' or qualifies by virtue of an internationally agreed co-production treaty. Qualification is administered by the British Film Institute (BFI) on behalf of the Department for Culture Media and Sport.
The Film Production Company (FPC) responsible for the production of the film can apply for an interim certificate that the film is British at any point before or during production, to BFI. The FPC can then make a claim for FTR by submitting this certificate with their claim, made in its Corporation Tax Return (CT600) to HM Revenue & Customs (HMRC).
If any 'interim' claim for FTR has been paid by HMRC to the FPC, the FPC must apply for a 'final' British film certificate from BFI, after the film has been completed. The final certificate must be submitted to HMRC. If the FPC does not submit a final certificate, then any FTR paid on the basis of the interim certificate is no longer due and will have to be repaid to the HMRC by the FPC.
No claim can be made without either an interim or final certificate.
'Earlier reliefs' as stated below apply for film completed by 31 December 2006.
Detailed guidance on the taxation of film production companies and FTR is available in the Film Production Company Manual.
Please see attached summary of Film tax credit claims (PDF 33K)
There is a specialist unit to deal with most claims for FTR. The Manchester Film Tax Credit Unit will deal with the Corporation Tax affairs of most companies eligible for FTR and will be able to answer queries about the taxation of film production companies and FTR.
The main exceptions to this are cases that are being dealt with by Large Business Service (mainly those which are part of larger groups) which will continue to be dealt with there.
Companies only making films not entitled to FTR will continue to be dealt with by their existing offices.
The address of the unit is:
Manchester Film Tax Credit Unit
Albert Bridge House
1 Bridge Street
Manchester
M60 9AF
Tel: 0161 288 6310
Email: Manchester
Film Tax Credit Unit
The Secretary of State for Culture, Media and Sport certifies films as British on the advice of the BFI, and any enquiries concerning certification should be directed to:
Certification Manager
BFI
21 Stephen Street
London
W1T 1LN
Tel: +44 (0)20 7173 3214
Email: Anna
Mansi
Relief for film production was previously provided by sections 40A to 43 Finance (No 2) Act 1992, section 48 Finance (No 2) Act 1997 and sections 130 to 144 of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005).
Queries on particular cases or operational issues should be directed to the Manchester Film Tax Credit Unit.
If you have any general/policy queries regarding the current rules or earlier reliefs for film production, please contact:
Nalini Arora
CT and Business Income Tax Workstream
HM Revenue & Customs
Room 3-64
100 Parliament Street
London
SW1A 2BQ
Email: Nalini Arora
