What Is FTR And How Can Your Production Company Benefit From It
The UK government’s eight tax incentives for the creative industries are designed to help production companies make films, TV shows or video games. FTR offers benefits such as 20% savings on qualifying expenses paid in relation with film releases from England & Wales which can be reclaimed through Self Assessment if you meet certain criteria.
All British film and television production companies that qualify for tax relief can claim a tax rebate of up to 25% of qualifying expenditure incurred in the UK, awarded 6-12 weeks after filing your claim. However, delays with HMRC are frequent.
The amount of tax relief that your company is awarded is capped at 80% of your qualifying expenditure. The good news is that there is no budget limit that is specified by HMRC.
How does FTR work?
FTR works by enhancing expenditure incurred in the development process thereby creating an additional deduction. This additional deduction will either reduce profit, or, create or extend a loss. Where the additional deduction creates or extends a loss, HMRC allows this loss to be surrendered for a payable tax credit. Therefore, by claiming FTR, a company will either reduce their Corporation Tax liability or receive a payable tax credit.
Eligible expenditure for FTR:
A company will be eligible if it qualifies as the Film Production Company (FPC).
To qualify as the FPC it must:
be incorporated in the UK or have a UK permanent establishment that falls within the charge to UK
be actively engaged in production, planning and decision making during the pre- production,
photography and postproduction stages of the film
directly negotiate contract and pay for rights, goods and services relating to the film.
A film will qualify if:
it passes the cultural test or qualifies as an official co-production
it is intended for theatrical release
at least 10% of the total production costs relate to activities in the UK
the first day of principal photography took place on or after 1 January 2007.
Passing the Cultural Test
The Cultural Test is a point system in which there are specific sections that pertain to content, cultural contribution, location and cast and crew. Films need to achieve at least 18 from a possible 35 points.
The sections are:
How Can You Apply?
There is a specialist unit within HMRC known as the Creative Industries Unit which handles claims for FTR and other creative industry tax reliefs. Once a business-owner has all the necessary documentation prepared and has successfully filled in the form issued by the Creatives Industries Unit, s/he can submit their claim to HMRC. This submission must include your tax return or company’s amended tax return.
Receive your Creative Tax Relief
When the validity of your claim has been thoroughly vetted and verified, HMRC will process the tax credit directly to your company’s bank account. As far as the actual amount of tax relief that the business will receive is concerned, HMRC provides a unique formula for each creative sector to help you estimate your claim.
However, in most cases, HMRC accepts claims for losses that amount to about 20% to 25% of enhanceable expenditure. This depends on the ability of a company to surrender those losses.
However, the entire process of dealing with HMRC, filing for the claim and having the money reflect in your account has proven to be a very slow and tedious process. This is where Adsum comes in.
Don’t Wait Around for HMRC! Get Your Creative Tax Credit Loans with Adsum.
The process of dealing with HMRC for your claim and the long cumbersome wait for the relief to reflect in your account can be tiring. Which is why with Adsum, you do not need to go through the hassle of strenuously dealing with HMRC regarding your claim. Based on your claim on the tax return filed by your accountant, Adsum can deliver you a Creative Tax Credit Loan while processing your claim.
Our team of experienced specialists help you review everything needed for submitting the claim and then deal with HMRC on your behalf – making the entire process hassle-free for you. Get in touch with us for more information on creative industry tax relief loans.