New tax credit boosts UK independent film industry
A game-changer for British cinema
The announcement of the UK’s new Independent Film Tax Credit (IFTC) in March has already made waves in the film industry. One notable example is the biopic “Giant,” which chronicles the life of boxer Naseem Hamed and stars Amir El-Masry. Initially, the production planned to shoot in Sheffield and Malta, but the new tax credit changed everything.
The impact on “Giant”
“Giant” was in advanced pre-production when the IFTC was unveiled. The film’s producers had planned to shoot location scenes in Sheffield and build sets in Malta, taking advantage of Malta’s 40% tax rebate. However, the new UK tax credit, offering around 32.5% after corporation tax, made staying in the UK more economically viable.
“As soon as the tax credit came out, we did the analysis and immediately it made more economic sense to keep it here,” explains Zygi Kamasa, head of True Brit Entertainment. “So we pivoted within days of it coming through.”
A boost for True Brit Entertainment
True Brit Entertainment, launched in November 2023, initially aimed to produce three films in its first year. Thanks to the IFTC, the company is now on track to begin shooting its eighth film. While some projects, like “Giant,” would have happened regardless, others were expedited due to the new tax credit.
A brighter future for UK independent films
The IFTC has brought a renewed sense of optimism to the British film industry, a stark contrast to the challenges faced in 2022. A report from that year highlighted how the boom in the UK’s film and high-end TV sector negatively impacted the independent sector. Rising production costs and competition for cast and crew made it difficult for smaller productions to thrive.
BFI statistics reveal that getting UK films budgeted under £15 million into production had become increasingly challenging. After a 31% drop in 2022, spending on independent UK films fell a further 11% in 2023.
Industry reactions
Harriet Finney, BFI deputy CEO, notes the positive shift in the industry since the IFTC announcement. “We’ve seen a lot of positivity in the industry. It’s definitely changed the conversation for independent filmmakers in this country.”
Simon Williams, managing partner at Ashland Hill Media Finance, reports an uptick in projects considering filming in the UK. “We’re getting lots of different projects coming to us, asking if they should be shot in the UK,” he says. However, he cautions against potential cost increases that could negate the benefits of the tax credit.
Notable projects
Ashland Hill-backed “The Magic Faraway Tree,” based on Enid Blyton’s beloved book, is currently in production. “The Scurry,” directed by Craig Roberts and starring Ella Purnell, Rhys Ifans, and Antonia Thomas, has just finished shooting, funded against the increased tax credit. “That film would never have happened if it wasn’t for this increased tax credit,” Williams says.
The future of mid-budget films
Alex Ashworth, head of production at Anton, believes the IFTC will significantly impact films in the £5-15 million budget range. “I think it will really help independent film producers where we’ve lost that mid-budget section,” Ashworth says. “Our incentives are good, but they aren’t necessarily comparable to some other territories. So by doing this, you’re offsetting basically the inflation that our production industry has experienced in the last five to seven years.”
A positive outlook
Producer Alastair Clark, whose recent film “Sister Midnight” premiered at Cannes, sees the IFTC as a positive development. “The mood is great,” Clark says. He believes the increased tax credit will reduce the need for riskier private financing in some cases.
Phil Hunt at Head Gear Films also views the IFTC as a positive move after the “nightmare of Brexit.” He notes that producers in North America are now looking to put more productions in the UK.
How the IFTC works
The IFTC is calculated on “core expenditure” related to production activities, with qualifying companies able to claim up to 80% of their core expenditure or the amount of UK core expenditure, whichever is less. For a £15 million budget film, this could mean a maximum credit of £6.36 million before tax.
After corporation tax, the actual cash benefit could range from £4.77 million to £5.15 million. This represents a substantial increase from the previous Audio-Visual Expenditure Credit (AVEC) system.
The BFI will assess film budgets to ensure they meet the IFTC criteria. Productions that exceed the £15 million budget cap during filming will have the option to continue with the IFTC or switch to the AVEC system.
Claims for the IFTC can be submitted to HMRC from April 1, 2025, for expenditure incurred from April 1, 2024, provided principal photography began after April 1, 2024.
Final thoughts
While the industry awaits full implementation of the IFTC, the initial response suggests it could play a crucial role in bolstering the UK’s independent film sector. For many, the hope is that the 40% rebate will eventually mean a full 40% for producers, making the UK even more competitive on the global stage.
“I’d love the government to look at that,” says Kamasa. “I think it should be the full 40%, because then you’d be truly competitive with places like Malta and Italy.”
The IFTC has already made a significant impact, and its full potential is yet to be realized. For now, the future looks bright for UK independent films.