The Labour government has given the green light to the hotly anticipated Independent Film Tax Credit (IFTC), which was confirmed by chancellor Rachel Reeves and culture secretary Lisa Nandy on the eve of the BFI London Film Festival today (October 9).
The BFI certification unit will begin accepting applications from October 30, the date on which the IFTC will now take effect after the formal statutory instruments are laid down by the government.
The BFI’s deputy chief executive Harriet Finney has confirmed the BFI has hired five additional staff to help with demand. Productions qualifying for the IFTC must have started principal photography on or after April 1, 2024, and only expenditure incurred on or after April 1, 2024 can be claimed.
The IFTC, officially known as the “enhanced audiovisual expenditure credit for low-budget films,” is aimed at films with a total production budget up to £15m. They can now benefit from an enhanced credit of 53%, an actual relief of around 40%, on up to 80% of qualifying expenditure.
Productions must meet the terms of the BFI’s existing cultural test and have a UK writer or director, or be officially certified as a UK co-production.
Productions with a total budget up to £23.5m can also partially qualify for IFTC, however they can only claim up to a maximum of 80% of £15m of the UK qualifying spend. Policymakers have identified £23.5m as the tipping point where it becomes more advantageous to claim the standard rate of AVEC on a film’s total core expenditure.
The standard AVEC has a headline credit rate of 34% and 25.5% in actual relief, capped at 80% of core expenditure. It is not yet clear whether the 80% cap will be removed for VFX costs claimed within AVEC, as proposed in the former Conservative government’s spring budget.
The IFTC was first announced under the last Conservative government as part of its March spring budget. It went into the Finance Act in May after years of lobbying by trade body Pact, the BFI and the independent film sector amid rising costs, and a growing challenge to indie producers from free-spending streamers.
Ratification of the long-awaited tax credit was then delayed once again by the surprise July general election, a delay which the new government now appears to have put to rest.
