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HMRC internal manual

Film Production Company Manual

Taxation: profit/loss calculation - income - nature


Where profits or losses of the film-making activity of a film production company (FPC) are subject CTA2009/Part 15 Chapter 2 (FPC20010), the income to be brought into account is all the receipts of the trade of making, or making and exploiting, the film.

This means all the money received from generating income from the film (turning the film to account) in the widest sense, including, but not limited to:

  • receipts from the sale of the film, or rights in the film;
  • royalties or other payments for the rights to use the film or aspects of it (for example, characters or music);
  • payments for rights to produce games or other merchandise; and
  • receipts by way of a profit share agreement.

Film Tax Credits due or paid to the FPC in connection with a film are not regarded as ‘income from the film’.

Loans and grants

Questions can arise about whether a receipt is a loan or not. Loans are not trade receipts; grants may be.

Receipts such as grants may be income where they are unconditional contributions to the costs of the film. But loans are not trade receipts and, as with any other trade, they are not counted as film income.

Film financing often involves bringing in money from a wide range of sources, and promising investors/contributors a contingent return on their money. Sometimes it may be difficult to decide the character of a receipt or loan. Some funders may impose standard terms but each receipt will have to be viewed on its own conditions.