BFI’s Harriet Finney confirms UK standalone tax credit is on track under new government

BFI Deputy Director General Harriet Finney said she was very optimistic that the Independent Film Tax Credit (IFTC), or enhanced audiovisual credit for low-budget films, would be approved by the new UK government.

“I can assure you there is a huge amount of work going on behind the scenes,” Finney said, speaking at Screen’s ‘Future of British Film’ Summit held at the BFI Southbank yesterday (September 24).

“DCMS (Department for Culture, Media and Sport) is working very, very hard on everything that needs to be done to bring this legislation into force.”

The IFTC, which provides a 40% tax cut for films with budgets under £15 million, was introduced during the last Conservative government. Spring budget for March, and came in Finance Bill in May.

A surprise general election was then held in July, bringing a new Labour government to power.

“There were very, very small periods of time where the government was able to pass any legislation,” Finney said.

“The last thing that needs to happen to get this going, to get certification and funding, is for (the government) to come up with a legislative act, which will set out all the details behind the proposal. It will set out the guidance and what people need to do.

“The legal framework needs to be in place for the BFI to issue certificates and for the process to begin, and the process will continue until then.”

“This is a policy that the incoming government really understands… They are moving really quickly,” Finney assured.

He could not specify a date for when the legislation would come into force. “The decision on when it will come into force is the government’s. We have had many discussions in government about the urgency.”

Moses Nyachae, partner in the film and TV team at chartered accountant Saffery, echoed Finney’s confidence. He said the main question he got from producers was whether the IFTC was going ahead. “There’s no indication to the contrary,” he confirmed. “It’s got royal assent, it’s in law. We’re just waiting for the technical step where they release the legislation that gives a little more detail behind the actual legislation.”

While producers cannot currently claim the IFTC, he said: “We are certainly working with producers who claim the AVEC (Audiovisual Expenditure Credit) at the current 34% rate and intend to claim the IFTC retroactively. We are also in discussions with a number of producers who are looking to cash in on an amount that is protected or secured against the IFTC.

“It’s a bit of a longer process because we have to send comment letters to lenders, like Coutts and Judith’s (Chan) team. At the moment, we can’t give a full opinion because the legislation hasn’t been published yet.”

Finney assured producers that they are prepared to handle the expected increase in certification applications once the IFTC is ready to implement it.

“We’ve worked hard at the BFI to ensure our certification unit is fully staffed,” he explained. “Not only are we dealing with a very high volume backlog at the moment, but we’ve also taken on five new staff to cope with what we anticipate will be a high demand for IFTC.”

“We’re in a bit of a limbo, but we’re very excited about it,” said Judith Chan, Coutts’ media banking manager. “We’re preparing for when we can lend against it.”

If all goes well, claims will be made from 1 April 2025 for films under the £15m budget band and entering production after 1 April 2024. Eligible films will be able to choose to claim the Enhanced Audiovisual Expenditure Credit (AVEC), which provides a 53% exemption for up to 80% of core spend, or around 40%. The ceiling for the IFTC will remain, while the 80% ceiling will be lifted from 1 April 2025 under the Conservatives’ original plans for the AVEC.

To qualify for the IFTC, films must meet the BFI cultural test that applies to UK films, and must also have a UK writer, director or be an official co-production and be scheduled for theatrical release.

If a film’s budget during production subsequently exceeds £15 million, the production company can choose to continue to claim IFTC at 53%, up to a maximum pre-tax credit of £6.36 million, or instead claim AVEC at 34% on all qualifying expenditure.

“As with all our other incentives, there is no cap, so it’s open to as many productions as can be produced,” Nyachae said, responding to a question about concerns that broadcasters would use the IFTC the most because it is not fully open to independent producers.

Also on the panel was Nicky Bentham, a producer at Neon Films and co-chair of trade body Pact’s filmmakers group. His credits include Roger Michell’s 2020 title Duke, The upcoming movie starring Jim Broadbent and Helen Mirren BridesThe feature-length directorial debut of theater director Nadia Falls underscores how critical the IFTC will be for independent filmmakers who are at a crisis point in securing budgets, getting films into production and making ends meet.

Bentham was part of the Pact group that first proposed the 40% tax cut figure for independent films in 2017.

“When I look at the trends and the numbers in 2017 and the fact that independent films are not just eroding but happening at a very alarming rate, I look back and wish we could go back to 2017 because it’s even harder right now.”

Bentham has yet to directly use the promised IFTC to close a budget. “Right now, to my knowledge, there’s only one lender that lends against the IFTC (Phil Hunt’s Head Gear), and the other manufacturers I know that have accessed it have done so through special guarantees or special sources,” Bentham said.

Hunt confirmed on the Money Talks panel later this morning: “We’ve delivered about 15, 20 UK tax credits in the last six months… I’m taking a risk.”

Zygi Kamasa, founder and CEO of distribution and production company True Brit Entertainment, who was part of the Money Talks discussion, confirmed that he used the promised increased tax credit to help budget for projects filming after April. “It’s a gamble worth taking,” he said, adding that it could be a “disaster” if it doesn’t happen.

Bentham confirmed that the IFTC had encouraged him to restructure his film to shoot in the UK, which he had planned to shoot abroad because it was too difficult to get funding from the UK.

“I was looking at how this could be done as a co-production, out of necessity rather than a need for a particular location or country,” he said. “Now, I’ve brought this project back as a fully UK film. It’s still very, very difficult to finance. What will be transformative for filmmakers is not just the tax credits, but hopefully the additional funding it will attract to the industry – financiers around the world are now looking to the UK as a place to make independent films.”

He added that for producers keen to co-produce, it has been transformative: “For a long time, co-producing with the UK didn’t really seem like a worthwhile endeavour. There are certainly international producers now who are approaching us and saying there’s a way to do it in partnership.”

Producers: trouble or struggle?

Bentham’s concerns about the state of the UK’s independent production sector were also raised during a panel discussion titled ‘UK Producers: The State of the Country’, where the panel discussed issues such as rising production costs, talent being squeezed by talent shortages in studios and broadcasters, public funders’ budgets under pressure and a lack of funding avenues for independent producers in the UK, which are throwing the sector into disarray.

“The state of the independent film industry is very bad – I don’t think it’s gotten worse since I started working in the industry,” says Gillian Berrie of Sigma Films. Berrie’s credits include Jonathan Glazer’s Under the Skinand David Mackenzie Missile The film, which has just wrapped filming, stars Aaron Taylor-Johnson.

“At this point, the government needs to intervene,” he said, adding that the IFTC should also join in.

Fiona Lamptey, former director of UK features at Netflix, who founded Juno Studios this year with former Netflix executives, said Juno was exploring non-traditional funding avenues: “There are a lot of investors who want to get into our industry who don’t have the skills or expertise, but they have the money. Our position is to be strategic in our partnerships.”

Lamptey added that Juno is in the early days of looking at fan-funded entertainment. “How do we grow and nurture that audience, but also allow that audience to have a say in our output? What does that look like? How do we then maintain ownership of that or share ownership with the audience? I don’t feel that pessimistic (about the future of the industry).”