Switch between Film Tax Relief and High-End TV Relief during production
Published 27 October 2021
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Who is likely to be affected
Film production companies producing films where the intention for theatrical release changes to an intention to broadcast.
General description of the measure
Film productions qualifying for Film Tax Relief (FTR) that change during production to instead meet the criteria for High-End Television Tax Relief (HETV) will be able to continue claiming FTR without losing their right to access tax relief, which will benefit film productions in the longer term.
Policy objective
For a programme to qualify for HETV, it must be intended for public broadcast via television or the internet. This test must be met at the outset of production activities, and it is then treated as being met throughout the entirety of production. This means that even if the intention were to change at some point e.g. a theatrical release was planned instead of a television broadcast, then the production would continue to attract relief on all qualifying costs.
For a film to qualify for FTR, it must be intended for theatrical release to the paying public at the commercial cinema. However, unlike HETV, this test must be met at the end of every accounting period rather than at the outset. If the intention changes partway through production e.g. the theatrical release is cancelled and the film instead becomes intended for a television broadcast, then the film will no longer attract any relief in that accounting period or any subsequent accounting period. It cannot retroactively qualify for HETV because it did not meet the broadcast intention at the outset of production.
The distribution landscape has changed significantly since the introduction of these reliefs, and more films are released directly to video on-demand services. This trend has accelerated recently due to the coronavirus (COVID-19) pandemic.
The government will legislate to offer companies the flexibility to change their intention for a production partway through development without jeopardising their access to tax relief.
Background to the measure
FTR was introduced by Finance Act 2006 with an effective date from 1 January 2007.
HETV was introduced by Finance Act 2013 with an effective date from 1 April 2013.
Detailed proposal
Operative date
The measure will have effect from 1 April 2022.
Current law
The current law is contained in Part 15 and 15A of the Corporation Tax Act 2009.
Proposed revisions
The requirements for FTR will be broadened so that productions would be eligible so long as they meet all the criteria for HETV.
Summary of impacts
Exchequer impact (£m)
| 2021 to 2022 | 2022 to 2023 | 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 |
|---|---|---|---|---|---|
| — | negligible | negligible | negligible | negligible | negligible |
This measure is expected to have a negligible impact on the Exchequer.
Economic impact
This measure is not expected to have any significant economic impacts.
The terms used in this section are defined in line with the Office for Budget Responsibility’s indirect effects process. This will apply where, for example, a measure affects inflation or growth. You can request further details regarding this measure at the email address listed below.
Impact on individuals, households and families
There is no impact on individuals as this measure only affects businesses. This measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
It is not anticipated that there will be impacts on groups sharing protected characteristics.
Impact on business including civil society organisations
Around 800 film businesses claim FTR and a small proportion of them are likely to be affected by this change. Companies will have more flexibility in choosing how to distribute films and will be more certain of not missing out on relief. This measure is expected to have a negligible impact on the costs for businesses. One-off costs for these businesses will include familiarisation, but this is expected to be negligible as there is very little familiarisation with the change required. There are not expected to be any continuing costs. Customer experience is expected to remain broadly the same as this measure does not alter how businesses interact with HMRC. This measure is not expected to impact civil society organisations.
Operational impact (£m) (HMRC or other)
Any operational impact is expected to be negligible.
Other impacts
Competition assessment: this relief is targeted at a particular sector. All companies in this sector will be eligible, so the policy’s introduction is unlikely to affect competition within the sector. There should not be any significant impact on competition with other business sectors.
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be kept under review through communication with affected taxpayer groups. HMRC will monitor this measure through the analysis of claims data and the publication of summary statistics.
An external review of the relief was launched in 2021 and due for publication in 2022.
Further advice
If you have any questions about this change, please contact Kerry Pope on Telephone: 03000 585740 or email: kerry.pope@hmrc.gov.uk, or Stephanie Martinez on Telephone: 03000 519492 or email: stephanie.martinez@hmrc.gov.uk