CREC021110 - Qualifying productions: independent films: introduction
Source: gov.uk (2025-02-26)


Section 1179DJA Corporation Tax Act (CTA) 2009

Independent films are referred to in legislation as certified low-budget films. If a film meets the qualifying criteria to be treated as an independent film, it is eligible for Audio-Visual Expenditure Credit (AVEC) at an enhanced relevant percentage of 53% (CREC061300).

Films that are not produced by independent studios can still claim the enhanced rate if they meet the qualifying criteria.

The amount of expenditure credit to which a production company is entitled for each independent film is subject to a cap which allows a maximum of £15,000,000 relevant global expenditure to count towards the expenditure credit calculation.

For more information about how the £15,000,000 cap works, see CREC061100.

Qualifying criteria

To be treated as independent, films must meet all the qualifying criteria that apply to other films, which are set out in CREC021000. In addition, they must have a low-budget certificate, issued by the British Film Institute (BFI).

The BFI will issue a certificate if the film passes the cultural test for film and also meets two further conditions:
- The budget condition (CREC021120)
- The creative connection condition (CREC021130)
The budget condition is met if the total core expenditure incurred on the film is £23.5m or less. The creative connection condition is met if the film either has a UK writer or director, or is an official co-production. Please read the linked guidance pages for more details.

There is no requirement for a film to be produced by an independent studio in order to be certified.

This manual explains how the conditions work and how certification affects the availability of relief. For detailed guidance on the certification process and the evidence required by the BFI when applying for a low-budget certificate, please see the BFI’s guidance: Apply for British certification and tax relief | BFI (https://www.bfi.org.uk/apply-british-certification-expenditure-credits)

Animated films

Animated films can be independent films, provided they meet all the qualifying criteria.

Commencement

Independent films must commence principal photography on or after 1 April 2024. Films which begin principal photography before that date cannot claim the independent film rate, even if they meet the independent film criteria.

The 53% rate only applies to expenditure incurred on or after 1 April 2024. If a production company incurs qualifying expenditure on an independent film before that date, that expenditure is eligible for relief at the applicable ‘normal’ AVEC rate – 39% for animated films and 34% for other films. This would be the case if, for example, an independent film began shooting shortly after 1 April 2024 but had incurred pre-production expenditure before that date.

Claims for independent films may be made from 1 April 2025.

Certificate applications

Applications for low-budget certificates opened on 30 October 2024.

Before 1 May 2025, companies which already have a cultural certificate for a film can contact the BFI to convert it into a low-budget certificate. From 1 May 2025, companies must instead surrender existing certificates and apply for a low-budget certificate from scratch.

If a company applies for and receives a regular film certificate on or after 30 October 2024, it cannot convert that certificate into a low-budget certificate. Instead, if it wishes to receive credit at the higher rate, it must surrender the original certificate and apply for a low-budget certificate from scratch.

AVEC claims before 1 April 2025

If a production company has made a claim for AVEC on a film before 1 April 2025 as an animated film or other film, and wishes to make an independent film claim for the same film after that date, the company must do two things:
- It must replace its existing cultural certificate with a low-budget certificate. To do this, the company can either:
- contact the BFI to convert its existing cultural certificate into a low-budget certificate, or
- surrender its existing certificate and apply for a low-budget certificate from scratch.If the 1 May 2025 time limit has passed or the company applied for a regular certificate on or after 30 October 2024, only the second option is available.
- It must withdraw its previous claim(s) and make a cumulative claim for all expenditure incurred to date in its first independent film claim. HMRC will pay the difference between the original claim(s) and the new claim.
The second step is necessary to prevent the film being locked into the 34% or 39% rate of AVEC.

This is because a company which makes a claim for a film using a relevant percentage of 34% must use the same relevant percentage for all future claims on the same film (CREC061300), unless the original 34% claim is withdrawn or amended. The time limit to withdraw or amend a 34% claim is the same as the time limit to make a claim. In most cases, it is 2 years from the end of the accounting period to which the claim relates, but see CREC085000 for more details.

Similarly, a company which makes a claim for a film using a relevant percentage of 39%, on the basis that it is an animated film, cannot make a claim for the same film in a later period on the basis that it is any other type of film (CREC061300), unless the original 39% claim is withdrawn or amended. For this specific purpose, the usual time limit to amend a claim does not apply.