FPC55030 - Calculation: rates of relief
CTA2009/S1200 & 1202
Where a film production company (FPC) is entitled to claim Film Tax Relief (FTR) in respect of enhanceable expenditure, the amount of the additional deduction and of any payable credit is determined by the amount of total core expenditure incurred by the FPC.
A maximum of 80% of the core expenditure is eligible for enhancement (FPC55020). The rate of enhancement is currently set at 100% for all films, and so the company receives an additional deduction equal to the amount of enhanced expenditure.
Where this additional deduction creates or increases a loss, the loss can be surrendered for tax credit at a rate of 25% (to the extent that the loss is surrenderable – FPC55100).
The examples below show the value of FTR relative to total core expenditure, assuming in each case that:
- at least 80% of the total core expenditure is UK core expenditure and,
- the rate of corporation tax is 19%.
1) FPC has sufficient taxable profits (before FTR) in order to absorb all the additional deduction
- Value of FTR = 80% x 19%
- = 12.16% as a reduction in corporation tax liability
2) FPC has no taxable profits (before FTR) and claims the maximum amount of tax credit
- Value of FTR = 80% x 25%
- = 20% as a tax credit
When companies have a small profit before FTR, and the additional deduction creates a loss, the value of the relief will fall somewhere between these two examples.
Pre-1 April 2015
Prior to this date, there were two separate rates of relief. Limited budget films (FPC10160) had a rate of enhancement of 100% and a payable credit rate of 25%. All other films had a rate of enhancement of 80% and a payable credit rate of 20%.