The announcement of the UK's new Independent Film Tax Credit (IFTC) last March had an almost immediate impact, at least if a single film was being made.
Giant, a biopic of boxer Naseem Hamed and co-starring Amir El Masry, was in pre-production when the news broke that there were plans to shoot scenes in Hamed’s hometown of Sheffield and all the interiors – including the main boxing ring – in Malta. Sets were already under construction on the Mediterranean island, which has attracted a number of film productions in recent years thanks to a generous 40% tax rebate initiative.
But then the International Trade Commission came out, and the UK suddenly became more competitive when it came to the bottom line for producers. What had been a 20% tax break was now around 32.5% (it was originally said to be 40%, but is actually lower after corporation tax). Given the costs involved in shipping the film overseas, Giant didn’t need to pack his bags.
“Once the tax exemption came out, we did the analysis and immediately found that it made economic sense to keep it here,” explains Ziggy Camassa, president of distribution and producer True Brit Entertainment. “So we changed course within days of it coming out.”
Giant may have been the first, but just six months after the IFTC announcement, Camassa says it has already contributed significantly to the production of his startup – which launches in November 2023 with a focus on films for British film fans. With an initial target of three films in its first year, True Brit will soon begin filming its eighth. And while some of that – like Giant – would have happened regardless of the tax break, he says “there were definitely films that were rushed through” because of it.
The huge interest and optimism within the British film industry since the ITC announcement, though it has yet to be fully implemented, is a far cry from the dark days of 2022. A report commissioned by the British Film Institute (BFI) that year made the key and ironic finding that the country’s overall boom in high-quality film and TV had had a similarly negative impact on the independent sector. It found that the speed and scale of growth had left the sector so stretched that it was unable to compete with larger-budget international productions on a number of levels – from absorbing the increased production costs, to securing cast and crew, and ultimately reaching audiences.
British films with budgets of less than £15m ($19.6m) are becoming increasingly difficult to produce, according to figures from the British Film Institute. After spending on independent films in the UK fell by 31% in 2022, spending in 2023 is set to fall by a further 11% to just £150m ($196.9m).
Now, in 2024, following the IFTC announcement, Harriet Feeney, deputy chief executive and director of corporate and industry affairs at the BFI, says, “We’ve seen a lot of positivity in the industry. It’s definitely changed the conversation among independent filmmakers in this country.”
The British Film Authority is currently preparing to increase its capacity once the statutory instrument and guidance notes are published later this year. “We are making sure we are in the best possible position to deal with what is likely to be a wave of activity,” explains Feeney. “There seems to be a growing sense of confidence around local production.”
Simon Williams, managing partner at Ashland Hill Media Finance, says he has seen a rise in projects considering shooting in the UK. “We get a lot of different projects coming to us asking if they should shoot in the UK,” he says, noting that some international producers are exploring adapting their scripts to meet UK requirements. “The UK is more attractive for films at the moment because the tax credit is probably bigger than anywhere else in the world, except maybe Australia. But Australia is far away and it’s expensive to get people there,” Williams says.
However, Williams expresses concerns about potential cost increases. “We don’t want costs to go up because of shooting in the UK, which would negate the benefit of the tax break,” he warns.
“The Ashland Hill-backed film, The Magic Tree Far Away, based on Enid Blyton’s beloved book, is currently in production. The Craig Roberts-directed film, starring Ella Purnell, Rhys Ifans and Antonia Thomas, has just finished filming, which was financed by Ashland Hill in exchange for an increased tax credit. “This film wouldn’t have been made without the increased tax credit. I think the only thing that might stop some lenders from putting their money against it is that it could be a great film. [is] “If you’re going into production now, you can’t file a claim for a tax credit until April of next year. Whereas with the current tax credit, you can file interim claims, which from a producer’s perspective, if you have a lender, you can file multiple claims and pay off the loan faster, rather than filing one big claim in 18 months,” Williams said.
Alex Ashworth, head of production at Anton, believes the ITC will have a big impact, particularly for films with budgets between £5m and £15m ($6.5m-$19.6m). “I think it will really help independent film makers where we’ve lost the mid-budget segment,” says Ashworth. “There was a long period where that was the sweet spot in the UK, films like The King’s Speech, and I feel the cost of production has gone up so much that it’s become very difficult to make at that level. Our incentives are good, but they’re not necessarily comparable to some other regions. So by doing this you’re essentially offsetting the inflation that our production industry has seen over the last five to seven years. I think it will really help those independent films that might have been struggling to make their financial plans to get into the higher budget levels.”
Ashworth estimates that Anton is currently working on four to five projects with IFTC in mind to shoot in the next 12 to 18 months.
Producer Alistair Clarke, whose latest film, “Sister Midnight,” premiered at Cannes, sees the IFTC system as a positive development for the industry. “The mood is great,” says Clarke. He also points out that while the net benefit after corporation tax is around 32.5%, rather than the 40% initially announced, it is still a big improvement on the previous system.
Clark has already begun incorporating the international tax credit into his project planning. “There’s definitely a very strong project that we’re raising funding for right now,” he says. “It’s a big part of it.” Clark believes that increasing the tax credit would reduce the need for riskier private financing in some cases. “It’s cheaper to borrow against a tax credit versus a minimum guarantee or a sales advance, so the financing helps with budget planning,” Clark says.
While the industry awaits the full implementation of the global trade agreement, the initial response suggests it could play a crucial role in boosting the UK’s independent film sector and positioning it more attractively on the global stage. For Phil Hunt of Head Gear Films, it’s certainly a positive step after the “Brexit nightmare”, which he claims has “ripped the heart out of independent co-productions”. The veteran producer says he’s already noticed that North American producers are “definitely looking to put more productions in the UK now, and when you talk to people in LA, there seems to be a drain away from the US”.
But that doesn’t mean executives see the IFTC as a perfect solution, of course. As with most newly launched financial incentives, there are hopes that it will be tweaked and changed along the way, especially with the UK under a new Labour government that has traditionally been more supportive of the arts. The ideal for many is that the 40% rebate actually means a full 40% for producers.
“I would like the government to look into this,” says Camassa. “I think it should be a full 40%, because that means being able to really compete with countries like Malta and Italy.”
How does IFTC work?
The IFTC is calculated on the basis of “core expenses” related to production activities, with eligible companies able to claim up to 80% of their core expenses or the amount of core expenses in the UK, whichever is lower. For a film with a budget of £15m ($19.6m), this would mean a maximum credit of £6.36m before tax.
After deducting corporation tax, which ranges from 19% to 25%, the actual cash amount could be between £4.77m ($6.26m) and £5.15m ($6.76m). This represents a significant increase on the previous Audiovisual Spending Credit scheme, which would have saved between £3.06m ($4.01m) and £3.30m ($4.33m) for the same budget.
The British Film Institute will assess film budgets to ensure they meet IFTC standards. Productions that exceed the £15m budget cap during filming will have the option to continue with IFTC or switch to the AVEC system.
Claims for IFTC can be made to HMRC from 1 April 2025, for expenses incurred since 1 April 2024, provided principal photography starts after 1 April 2024.
