UK Film Tax Relief (FTR) is available for all British qualifying film of any budget level. Qualifying companies can claim a larger deduction or in some circumstances, claim a payable tax credit when calculating profits.
The reliefs work by increasing the amount of allowable expenditure and where the company makes a loss, the loss can be ‘surrendered’ and some or all of the loss can be converted into a payable tax credit.
To qualify, a file must pass the cultural test or qualify as an official co-production and it must be intended for theatrical release. At least 10% of the production costs are incurred in the UK and the first day of filming took place on or after 1st January 2007.
Films are entitled to either:
An additional tax deduction (the enhancement) of 100% of enhanceable expenditure (the lesser of UK qualifying expenditure or 80% of total qualifying expenditure)
If a loss is surrendered (25% of the loss up to the amount of enhanceable expenditure)