HMRC’s press release titled ‘Creative industry reliefs triumph at the Oscars’, gives a very clear reason why this is currently in the news. The British film industry is thriving and HMRC are, rightly, keen to demonstrate the impact of their Film Tax relief. No red carpet moment for them, but no less important to acknowledge the financial support this gives UK film makers.

What is the current state of British film making?

Financial Secretary to the Treasury, Jesse Norman, said: “Like the rest of this year’s awards season, Sunday’s Academy Awards highlighted the amazing talent of the UK film industry. Creative sector tax reliefs have supported these internationally-acclaimed productions, and ensured that the UK remains a world leader in supporting creativity and innovation in the film industry. In 2017, our creative industries made a record contribution of more than £100 billion to the UK economy. They play a key role in ensuring that it, and the UK arts scene in general, remain dynamic, diversified and daring.”

British Film Institute (BFI) statistics show that over £3.6billion was spent on film and high-end TV production in 2019. This is the highest ever amount in the UK.

At a more immediate and personal level, Producer of the Oscar winning film ‘1917’ said: “The UK film and high-end TV tax reliefs have been absolutely crucial [both] in terms of supporting the UK production industry… On ‘1917’ alone, we were able to give employment to over 1,200 crew and more than 1,000 cast, stunt performers and supporting artists. As well as the direct employment a major film creates, there is also a large economic benefit for the regions where shooting takes place. In the case of ‘1917’, we shot across the UK in 12 separate locations, from Glasgow down to Salisbury Plain.”

What is Film Tax Relief?

Film tax relief, as it is known, is part of HMRC’s ‘Creative Industry tax reliefs for Corporation Tax’ regulations. This divides into eight separate sections:

  • films
  • high-end television
  • children’s television
  • animation television
  • video games
  • theatrical productions
  • orchestral concerts
  • museum or gallery exhibitions

Each one has its own specific set of appropriate eligibility criteria. You can see the specifics here.

But one qualification applies to all of the creative industry tax reliefs.  Each project must be certified as British by passing the Cultural Test, as administered by the BFI.

How much is film tax relief worth?

Film Tax Relief is 25% of all the production’s qualifying expenditure, there is no minimum or maximum budget limitation.

5,000 companies have claimed this tax relief since it began in 2007. It also has a remarkable return on investment for the UK economy, with each £1 of film tax relief generating £7.

What about R&D Tax Credits in the Arts, Entertainment and Recreation Sector?

According to HMRC’s latest statistics, R&D tax credit claims from the Arts, Entertainment and Recreation sector comprised only 1.06% of the total. That’s an average claim of only £111,111. The industry sector as a whole only received 2.2%, £40million, of the total amount given.

R&D tax credits focus solely on “scientific and technological innovations”, which do play a part in many creative industry projects. But it is not always as integral as in other industries, such as the Information and Communication sector. We’d love to see more clients make use of the R&D tax credits that are available to them and do feel that a lack of knowledge is part of the uptake problem.

If you are considering an application for R&D tax credits or Creative Industries tax relief, we can help you decide on your best option. The interplay between different tax regulations and other grant funding is tricky to navigate. Maximising your tax relief and being as tax efficient as possible is often best organised by a professional.

We look forward to your call.

Jamie Smith