Thankfully, the Chancellor, the government and His Majesty’s Treasury have listened to the Creative Industries sector with the latest reforms to Creative Industry Tax Relief (CITR) announced in this week’s Spring Budget. These include additional support for British independent films with their own expenditure relief, as well as permanent tax reliefs for theatres, orchestras, museums and galleries.

Our summary of the key points

New Independent Film Tax Credit (IFTC)

The Chancellor announced additional tax relief for UK independent films which are already eligible for the Audio-Visual Expenditure Credit (AVEC).

The AVEC is currently set as a basic credit of 34% of qualifying expenditure. Following the change, companies which have qualifying UK independent films, with a budget of £15 million or less, will be able to claim a new UK Independent Film Tax Credit (IFTC) of 53%.

Qualifying expenditure will be capped at 80% of the film’s total core expenditure, with the maximum taxable credit set at £6.36 million. Qualifying films will need to commence principal photography on or after 1 April 2024 and claims can be made from 1 April 2025 onwards.

How the IFTC works

• The IFTC seeks to provide additional support to independent films eligible for the AVEC, offering a higher credit rate than the basic AVEC rate of 34%.
• Films must pass a new British Film Institute test, targeting productions with projected core expenditure not exceeding £15 million, and featuring either key UK talent or qualifying as official international co-productions.
• The credit claim for independent films is capped at the maximum amount available for a production with core expenditure of £15 million.
• Films failing to qualify as independent can continue claiming AVEC at the standard rates, but will be ineligible for both IFTC and additional relief for visual effects expenditure on the same production.

Further details will be made available in due course from HMRC.

Enhanced relief for visual effects

From 1 April 2025, companies with qualifying visual effects costs for film and high-end television will be able to claim an increased AVEC of 39%, which is a 5% increase on the basic credit rate. The 80% cap will also be removed for qualifying visual effects costs.

Cultural Reliefs

It was announced that the rates for Cultural Reliefs at 45% for Touring and 40% for non touring, will  be made permanent.

The higher rate Cultural Reliefs, including Theatre Tax Relief (TTR), Orchestra Tax Relief (OTR), and Museums and Galleries Exhibitions Tax Relief (MGETR), were introduced as temporary measures in 2020 to aid the sector’s recovery from COVID.  And whilst these temporary rate adjustments had been extended in previous Budgets, they had been due to end in April 2025.

The new permanent rates

From April 1, 2025, the new permanent rates for TTR, OTR and MGETR will be set at 40% for non-touring productions, and 45% for touring productions and orchestra productions.

MGETR will transition into a permanent tax relief without a sunset clause.

	Current CITR rates (%)	Permanent CITR rates from 1 April 2025 (%)
Theatre Tax Relief: non-touring	45	40
Theatre Tax Relief: touring	50	45
Orchestra Tax Relief	50	45
Museums & Galleries Exhibitions Tax Relief: non-touring	45	40
Museums & Galleries Exhibitions Tax Relief: touring	50	45

 

These announcements are welcome news for all and signify a concerted effort by the government to bolster the independent film sector and provide enduring support to theatres, orchestras, museums & galleries, and fostering growth in these vital industries.

For further information on the Spring Budget announcements or any of the issues raised, please contact Jai Vora.

 

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