This is an expanded version of an article I wrote for movieScope magazine.
Tax is rarely exciting. It falls between dealing with insurance and music clearances in the top ten things I dislike most about my job. However, it’s a necessary evil and I often have to spend large amounts of time getting to grips with the intricacies of legislation.
Last year I was ploughing through the finer details of the UK Tax Relief scheme when something hit me—there is no criteria for the length of eligible films.
This means that short films can claim tax relief (subject to the other eligibility rules).
I spoke with Dave Morrison, from Nyman Libson Paul, who is at the forefront of UK film tax regulations, having recently completed the tax return for one of the UK’s largest films of last year. I asked Dave if he felt that many short film producers were aware of the tax possibilities of short film:
|“I suspect that many young filmmakers in the process of making shorts will not have access to a specialist accountant and will not be aware that short films are potentially eligible for UK Film Tax Credits”
The current Tax Relief for British films provides for a refund of around 20 per cent of the budget. The rules differ slightly for films over £20m but for this article we will assume most short films are made on budgets under £20m!
Warning: Hard Work required!
Although the prize at the end is attractive, this journey is not for the fainthearted. It requires a large amount of work and a mountain of paperwork. Not all films are eligible and I would advise against first-time filmmakers applying unless their film is truly made as a commercial venture. The HMRC will not approve any claim they do not feel fits 100 per cent within the rules.
Steps in Applying For Tax Relief
- Prepare your accounts, either via your accountant or do so yourself and have an accountant sign off your books. More information...
- Obtain a British Film Certificate via the Cultural Test. This is nothing to do with what rating your film will be in the cinema but relates to whether or not
it is classified as British. More information...
- Submit your tax return and claim to HM Revenue & Customs, including your British Film Certificate and ample documentation proving your film is eligible under the tax legislation. More information...