FPC55100 - Film Tax Relief: Calculation: Surrenderable losses and film tax credit

FA06/SCH5/PARA6 – PARA8

A film production company (FPC) has the option of claiming Film Tax Relief (FTR) as a payable tax credit – a payment direct from HMRC. It can do so in any period in which it has a surrenderable loss.

The company may surrender all or part of its surrenderable loss.

The amount of the surrenderable loss

The amount of the ‘surrenderable loss’ for any accounting period is the lesser of:

• the amount of the trading loss in the period (taking account of the additional deduction); and,
• the enhanceable expenditure ( FPC55020) for that period (i.e. the lesser of core UK expenditure or 80% of total core expenditure) less any amount surrendered in previous periods).

Note that for a large budget film (i.e. a film that is not a limited-budget film ( FPC10160))- for which the rate of enhancement applied to the enhanceable expenditure to generate the additional deduction is 80% ( FPC55030) – the amount of the surrenderable loss may be greater than the amount of the additional deduction. In such a case the company can surrender a greater amount of loss than the additional deduction. In other words it can surrender not only the loss attributable to the additional deduction but also some ‘ordinary’ loss.

The amount of payable credit

The amount of the payment is the payable credit rate multiplied by the amount of loss surrendered.

The payable credit rate is dependent of the size of the film’s budget: