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HMRC internal manual

Film Production Company Manual

Film Tax Relief: Eligible Expenditure: Non-core expenditure

CTA2009/S1185; CTA2009/S1200

The film tax relief (FTR) described in Chapter 3 Part 15 is provided only on those elements of core expenditure (FPC50010) which are also UK expenditure (FPC50050).

It therefore follows that FTR is not provided on all UK expenditure. Some elements of UK expenditure will not attract FTR because they do not relate to the core activities of pre-production, principal photography and post-production. Even if such expenditure takes place within the UK, no FTR is due on it.

For example, to the extent that a script is used as part of the process of establishing the practical viability of a film, the relevant expenditure will be development expenditure and therefore excluded from core expenditure.

Likewise, expenditure on the print and advertising of a film is part of the cost of its distribution and therefore will not attract FTR on the grounds that it is not core expenditure.

Where an FPC incurs:

  • core expenditure which does not qualify as UK expenditure, or
  • UK expenditure which is not core expenditure,

such expenditure will not attract FTR. However, this does not mean that the expenditure will not be relieved for tax purposes. Instead, the expenditure will be subject to normal tax rules, including the rules for FPCs in FA06/SCH4, and so will generally be available to be set against the income of the FPC.