British Films and Tax Relief
The BFI is the national body in charge of the qualification of British films. Films can qualify as British in one of three ways. They must meet the requirements of one of the following:
- The Cultural Test
- One of the UK's official bilateral co-production treaties
- The European Convention on Cinematographic Co-production
For more information about the certification unit and the different ways productions can qualify as British, please visit the dedicated page on the
BFI Certification Unit website
Cultural Test
Qualifying as a British film via the Cultural Test provides a number of advantages: productions are eligible to apply for UK Film Council funding and for the benefits of the UK's tax relief system.
For Cultural Test Application Form and Guidance, please visit the
BFI Certification Unit website
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Co-production
Qualifying as a British film under one of the UK's official co-production treaties provides a number of advantages: productions are eligible to apply for UK Film Council funding and for the benefits of the UK's tax relief system. Films made as official co-productions are not required to pass the Cultural Test for British film.
For Co-Production Application Form and Guidance, please visit the
BFI Certification Unit website
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European Certificate of British Nationality
Obtaining an European Certificate of British Nationality (formerly known as EC Certificate) from the UK Film Council may give producers more opportunities to exhibit your production in Europe. Some EC countries have quotas on the number of non-EC films exhibited in their countries, so a European Certificate of British Nationality can help you qualify for screen quota and get your film shown.
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Tax relief
Value of UK tax relief
- For films with a total core expenditure of £20 million or less, the film production company can claim payable cash rebate of up to 25% of UK qualifying film production expenditure;
- For films with a core expenditure of more than £20 million, the film production company can claim a payable cash rebate of up to 20% of UK qualifying film production expenditure;
- We have an example of a British film claiming tax relief to download (in related media on the right hand side of this page).
Accessing UK tax relief
- Tax relief is available for British qualifying films. Films must either pass the Cultural Test or qualify as an official co-production;
- Films must be intended for theatrical release;
- Films, including those made under official co-production treaties, must reach a minimum UK spend requirement of 25%;
- Tax relief is available on qualifying UK production expenditure on the lower of either:
- - 80% of total core expenditure; or
- - the actual UK core expenditure incurred.
- There is no cap on the amount which can be claimed.
- The FPC responsible for the film needs to be within the UK corporation tax net.
Minimum UK spend requirement
A minimum of 25% of costs must be spent on UK qualifying production expenditure.
UK qualifying production expenditure is defined as expenditure incurred on filming activities (pre-production, principal photography and post production) which take place within the UK, irrespective of the nationality of the persons carrying out the activity.
HM Revenue & Customs' (HMRC) definition of UK spend introduces the concept of where a good or service is "used or consumed" in the UK. If they are used or consumed in the UK, the expenditure is treated as UK expenditure (under the rules set out in the clauses of the Finance Bill). If they are used or consumed outside the UK, they do not count as UK expenditure.
Further details on the definition of "used or consumed" are available in
HMRC's guidance on Film Tax Relief.
Film production company (FPC)
UK film tax relief is available to FPCs.
The FPC is defined as the company responsible for the principal photography and post production of the film and for the completion of the finished film. (There is no requirement for the film rights to be owned by the FPC at the time the film is completed).
The FPC must be within the UK corporation tax net.
Film tax unit
The UK now has a specialist government unit to deal with the corporation tax affairs of companies which are eligible for film tax relief. The unit, which is part of HM Revenue & Customs, works mostly with Special Purpose Vehicles established to make a single film.
The Manchester Film Tax Credit Unit can be contacted at
RandD.Manchester@hmrc.gsi.gov.uk or tel: +44 (0)161 288 6310.
Further guidance
Media lawyers and accountants can provide advice on British qualification and accessing UK tax relief. Contact information can be found in UK production directories:
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British films & tax relief – FAQs
How can films qualify for tax relief in the UK?
Tax relief is available for British qualifying films. Films must either pass the Cultural Test or qualify as an official co-production.
Films must be intended for theatrical release.
Films, including those made under official co-production treaties, must reach a minimum UK spend requirement of 25%.
Tax relief is available on qualifying UK production expenditure up to a maximum of 80% of total qualifying costs. There is no cap on the amount which can be claimed.
The film production company (FPC) responsible for the film needs to be within the UK corporation tax net.
Who is tax relief available to?
UK film tax relief is available to Film Production Companies (FPC).
The FPC is defined as the company responsible for the principal photography and post production of the film and for the completion of the finished film. (There is no requirement for the film rights to be owned by the FPC at the time the film is completed).
The FPC must be within the UK corporation tax net.
How much tax relief is available?
For films that cost up to £20 million, the Film Production Company (FPC) can claim an enhanced deduction of 100% with a payable cash element of 25% of UK qualifying film production expenditure.
For films that cost over £20 million, the FPC can claim an enhanced deduction of 80% with a payable cash element of 20% of UK qualifying film production expenditure.
Tax relief is available on qualifying UK production expenditure up to a maximum of 80% of total qualifying costs.
What is the minimum UK spend requirement?
A minimum of 25% of costs must be spent on UK qualifying production expenditure.
UK qualifying production expenditure is expenditure incurred on filming activities (pre-production, principal photography and post production) which take place within the UK, irrespective of the nationality of the persons carrying out the activity.
This definition depends on where goods or services are "used or consumed". If they are used or consumed in the UK, the expenditure is treated as UK expenditure. If they are used or consumed outside the UK, they do not count as UK expenditure.
Only expenditure incurred by the film production company is eligible for Film Tax Relief.
Further details on the definition of "used and consumed" are available in
HMRC's guidance on Film Tax Relief.
For further information contact the BFI Certification Unit:
Anna Mansi
Certification Manager
BFI
21 Stephen Street
London W1T 1LN
Tel - 020 7173 3134
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