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HMRC internal manual

Business Income Manual

Films and sound recordings: overview

This section contains guidance on the tax law and practice for trades and businesses which exploit films and sound recordings.


Corporation Tax

Special rules apply to the tax treatment of film production companies. Guidance is in the Film Production Companies Manual.

If there is no film production company for a film, either because no company meets the required criteria, or because a company would satisfy them but has elected to be treated as not doing so, then the special rules do not apply and any film production activity is subject to normal tax rules.

Income Tax

There is no equivalent to the film production companies rules for Income Tax. Accordingly, film production activity by non-corporate taxpayers is subject to normal tax rules.

Old regime

Before the introduction of the film production companies rules by Finance Act 2006, different special rules applied to expenditure incurred on the production or acquisition of the original master version of a film for both Income Tax and Corporation Tax purposes. These rules are summarised at BIM56010, including details of their repeal. The old regime gave rise to a substantial number of avoidance schemes and corresponding anti-avoidance legislation. Anti-avoidance rules which may still have effect in relation to films within the old regime are described at BIM56500 onwards.

Sound recordings

Expenditure incurred by a person carrying on a trade on the production or acquisition of the master version of a sound recording is deemed to be expenditure of a revenue nature. There are special rules governing the timing of deductions for such expenditure. See BIM56200 onwards.

Any receipts from the exploitation of the master version are similarly treated as receipts of a revenue nature.