Film and television tax reliefs for production companies

Mercer & Hole Audit and Business Advisory Partner, Andy Turner has considerable experience of the media sector and has advised many film and television production clients over the past 29 years. Working Title Films, Universal, ITV are amongst those who have benefitted from Andy’s commercial insight, technical expertise and dedication to excellent client service. Andy is also a BAFTA member – he is no ordinary accountant!

Here, Andy looks at some of the tax reliefs which can benefit British film and television production companies, which can help them to continue to produce high quality and award-winning work now and in the future.

What challenges does the industry face?

British made films and television have made a comeback, winning awards and becoming critically acclaimed across the world. Financing continues to be hard work for most and many productions are still driven by the larger studios with bigger budgets, allowing them to utilise the top industry talent. The new levels of competition within the industry has seen entrants such as Netflix and Amazon challenging existing formats and demanding higher quality content from their suppliers. Additionally, production companies face concerns over the impact of Brexit and the risks around the continuation of European funding.

Help in the form of creative tax reliefs

On a brighter note, there are several creative tax reliefs which have been introduced in recent years to help production companies produce sustainable British content. Film Tax Relief (FTR) was introduced in January 2007, High-end Television Relief (HTR) and Animation Tax Relief (ATR) have been available since April 2013, with Children’s Television Tax Relief (CTR) following in April 2015.

How are these reliefs being used?

These creative tax reliefs have been much welcomed by the industry and official statistics produced by HMRC demonstrate how valuable they are:

  • There were 180 films completed in the UK in 2017-18 which claimed FTR, with UK expenditure of £893 million. Since the relief was introduced in 2007, 2,420 films have made claims, accounting for £10.2 billion of UK expenditure. A total of £2.7 billion has been paid out to 4,495 claims since the current film tax relief was introduced in 2007, of which over £2 billion were tax credit claims paid to large-budget films and £721 million to limited-budget films.
  • There were 60 high-end television programmes completed in the UK in 2017-18 which claimed HTR, with UK expenditure of £612 million. Since the relief was introduced in 2013, 310 programmes have made claims, accounting for £2.4 billion of UK expenditure.
  • There were 15 animations completed in the UK in 2017-18 which claimed ATR, with a UK expenditure of £45 million. Since the introduction of the relief in 2013, 145 animation productions have claimed the relief, accounting for UK expenditure of £250 million.
  • There were 15 Children's Television programmes completed in the UK in 2017-18 which claimed CTR, with UK expenditure of £24 million. Since the relief was introduced in 2015, 75 programmes have made claims, accounting for £71 million of UK expenditure. A total of £18 million has been paid out in response to 85 claims for CTR since the introduction of the relief.
How do these creative reliefs work?

Whilst these creative reliefs help to provide real opportunities for production companies, there are, of course, a number of qualifying factors to consider. A brief overview follows:

Film Tax Relief

Film Tax Relief (FTR) aims to promote the sustainable production of culturally British films. It is aimed directly at film production companies for the expenses they incur on the production of a film intended for release in commercial cinemas. For a film to be eligible for relief, it must be certified as British, by passing the cultural test, and must incur at least 10% of the total production expenditure in the UK. The first day of principal photography must have taken place on or after 1 January 2007.

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