UK film tax credits

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Page written by Rachel Wait. Last reviewed on July 25, 2025. Next review due April 6, 2026.

The UK offers generous tax relief to support the film industry, helping production companies lower their costs and attract investment. Known as Film Tax Relief (FTR) or film tax credits, this incentive is a key part of the government’s broader strategy to encourage creative work in the UK.

However, the FTR scheme is being phased out and replaced by the Audio-Visual Expenditure Credit (AVEC). This means you can only claim under the FTR scheme if principal photography began before 1 April 2025 and you submit your final claim by 31 March 2027.

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What is the UK film tax credit?

The UK film tax credit is a government incentive that offers tax rebates to qualifying film productions. If you meet the criteria, you can claim back up to 25% of qualifying UK expenditure. This can significantly reduce the cost of making a film and improve cash flow, especially for smaller or independent productions.

How does the UK film tax credit work?

If your film production company meets the eligibility criteria and you pay corporation tax, you can claim an additional deduction to reduce your profits or increase your loss.

The additional deduction is the lower of either:

80% of total core production expenditure, or
The actual UK core production expenditure

If your company is profitable, you can use the tax relief to reduce your corporation tax bill.

If your company makes a loss, you can exchange some or all of that loss for a payable tax credit – worth 25% of the surrendered amount.

Here’s an example of how it works:

Your total core production costs = £10 million, so 80% of this = £8 million
Your UK core production costs = £7 million

The additional deduction is based on the lower of the two, so £7 million.

If you surrender a trading loss of £7 million, the cash tax credit is 25% of this, which comes to £1.75 million.

What costs can be claimed under the film tax credit?

Under the film tax credit, you can claim core production expenditure incurred in the UK. This includes:

UK-based cast and crew

You can claim for the cost of employing UK-based cast and crew, including salaries, National Insurance and pension contributions, and agents’ fees (if paid by the production company). Claims can also include UK accommodation costs, as well as fees for UK-based stunt performers, extras, and other on-screen or production talent.

Production and post-production expenses

Eligible costs include hiring camera, sound and lighting equipment, as well as art department expenses such as set design, construction, and props. You can also claim for costume, hair and makeup, and any post-production work – such as editing and visual effects – provided it’s carried out in UK facilities.

Transport and catering expenses directly linked to UK-based production work may also be included.

Studio and location hire

You can claim for the cost of renting UK-based studios and sound stages, as well as fees for filming on location in the UK. Associated costs such as security, site access and cleaning are also eligible if they related to UK production activity.

Benefits of the UK film tax credit

The key benefit of the UK film tax credit is that it significantly reduces production costs, making the UK a more attractive location for film investment. By lowering the financial risk for producers and investors, it encourages greater investment in UK-based productions and helps strengthen the domestic film industry.

What’s more, because the tax credit is tied to UK-based spend, it incentivises productions to hire UK cast, crew and post-production facilities, helping to create jobs and boost the economy.

How to apply for the UK film tax credit

If you want to apply for the UK film tax credit, here’s how to do so:

Step-by-step process

Check that your film qualifies: You must have started principal photography before 1 April 2024, and your production must be able to pass the cultural test that assesses the UK cultural content of the film.
Apply: Submit your application and supporting documents to the British Film Institute Certification Unit.
Assessment: Your application is then assessed and if your production meets the requirements, you’ll receive a certificate to confirm you are eligible for the FTR scheme.
Claim your tax credit: Once you’ve completed your production, you can claim the film tax credit through your corporation tax return (CT600). You will need to calculate the amount of additional deduction due to your company, or any payable credit due.

HMRC typically processes claims within six to 12 weeks.

Documentation and compliance requirements

When submitting your application to the BFI Certification Unit, you must include:

Your completed cultural test application form
The shooting schedule
Production budget
Financial statements

When submitting your claim to HMRC, you must include:

Your CT600 tax return
A statement showing your core expenditure, broken down by category and by UK and non-UK spending
BFI certificate

Common mistakes to avoid

Some of the biggest mistakes to avoid when applying for film tax relief include:

Failing to apply for BFI certification
Overclaiming costs that don’t meet the definition of core UK expenditure
Not using a UK production company
Failing to provide the required evidence, such as cost breakdowns and BFI certificates
Missing the deadline

It’s essential that you have BFI certification before you apply and supply all the necessary documentation within the given timeframe to support your claim.

Advance funding options for film tax credits

Film tax credits are typically paid once you’ve already incurred production costs and submitted your claim through your tax return. However, many production companies choose to arrange advanced funding to give them early access to this money. This enables them to borrow against the expected tax credit. Some of the options include:

Tax credit loans

A tax credit loan uses your future film tax credit as security. The lender typically advances you up to 90% of the estimated credit, and you repay this once you’ve received your tax credit.

However, remember that like any loan, your tax credit loan accrues interest, and you might have to pay a fee on top.

Bridging finance

Bridging finance is a short-term loan that ‘bridges’ the gap between when production costs have to be paid and when you receive funding, such as film tax credits. Again, you must pay interest on your borrowing.

Specialist film and TV lenders

These are lenders that have lots of experience in film and TV financing and can offer bespoke lending packages such as tax credit lending, cash flow loans and gap financing. Always read the terms and conditions of the loan carefully to ensure you understand how the loan is to be repaid and how much interest will be charged.

What is the Audio-Visual Expenditure Credit (AVEC)?

AVEC is the new UK tax relief scheme that’s replacing film, high-end TV, animation and children’s TV tax reliefs. It applies to most productions from 1 April 2025.

Your production must still be certified as British by the BFI, but you can claim the following expenditure credit rates:

39% of qualifying expenditure for children’s TV programmes, animated films and animated TV programmes
53% on independent films
34% on all other films and TV programmes. Certain films and programmes can also claim further credit for visual effects costs.

Alternative funding options for film production

If you’re exploring other ways to fund your film production, consider the following:

Equity investment

Equity finance is when an investor injects capital into your business in return for a share of ownership (equity) and/or some control of the business. Although this means your investors have a claim on your future earnings, unlike a loan, you don’t need to repay the capital or pay interest.

Grants and public funds

Business grants don’t need to be repaid either, but eligibility criteria can be strict. This is usually based on the size and location of your business, as well as the sector you’re in.

Alternatively, you could explore the idea of crowdfunding which lets you collect money from several people via online platforms. In return, they might receive a reward (such as a product or service offered by the business) or shares in the company. Some crowdfunding schemes are donation based only.

Pre-sales and distribution deals

Pre-sales and distribution deals are common ways to secure funding for a film before it’s completed, or even before production begins. It enables you to leverage your film’s future earnings to raise funds upfront.

Pre-sales involve selling the rights to distribute your film in specific territories before the film is finished, while a distribution deal gives a company the right to market and release your film in a certain region or platform.

Get started with Swoop's business funding platform

If you’re looking for financial support to get your film production off the ground, the team at Swoop can help. We can talk you through the different options, help you understand which tax credits you might qualify for, or help you find the ideal lender for your business. Get in touch today.

Written by

Rachel Wait

Rachel has been writing about finance and consumer affairs for over a decade, helping people to get to grips with their finances and cut through the jargon. She's written for a range of websites and national newspapers including MoneySuperMarket, Money to the Masses, Forbes UK, and Mail on Sunday. Rachel has covered almost every financial topic, from car insurance and credit cards, to business bank accounts and mortgages.

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