The Independent Film Tax Credit (IFTC) is an enhanced 53% rate of Audio-Visual Expenditure Credit for low-budget British films, worth an effective 39.75% after tax on up to £15 million of qualifying spend.
Key Takeaways
- IFTC pays a 53% credit rate on qualifying core expenditure, well above the 34% standard AVEC rate for film.
- Only films with core expenditure up to £23.5 million qualify, and the credit itself is capped at £15 million of qualifying spend regardless of total budget.
- The maximum possible credit is £6.36 million before tax, worth up to £4.77 million in cash after corporation tax.
- Films must meet a separate BFI low-budget film test, needing a British lead writer, a British lead director, or official co-production status.
- TV programmes don’t qualify at all – IFTC is theatrical release only.
- You can’t combine IFTC with the VFX or animation uplifts on the same production.
- Claims can be submitted to HMRC from 1 April 2025 for expenditure incurred since 1 April 2024, provided principal photography also started on or after that date.
Table of contents
1. What is the Independent Film Tax Credit (IFTC)?
IFTC isn’t a standalone relief.
It’s an optional, enhanced version of the Audio-Visual Expenditure Credit that low-budget British films can opt into instead of claiming standard AVEC. The government announced it at Spring Budget 2024, confirmed the detail through a Statutory Instrument laid on 9 October 2024, and opened BFI applications from 30 October 2024.
Where standard AVEC pays a 34% credit on qualifying expenditure, IFTC pays 53%.
Both are “above the line” credits, meaning they’re calculated before tax and then taxed at the main corporation tax rate.
Run through that maths and IFTC nets down to an effective 39.75%, against 25.5% for standard AVEC on film: the gap gives smaller British films a materially better return than the productions they’re competing against for finance.
2. Who qualifies for Independent Film Tax Credit? actually qualifies
A film needs to clear several conditions at once, and missing any one of them rules out IFTC entirely!
- Core expenditure on the film can’t exceed £23.5 million. This is the whole production budget excluding financing, marketing and distribution costs, not just the UK portion.
- At least 10% of that core expenditure has to be used or consumed in the UK, the same baseline condition that applies to standard AVEC.
- Principal photography must have started on or after 1 April 2024, and only expenditure incurred from that date counts.
- The film has to be intended for theatrical release. There’s no equivalent for television, so a project made for a streaming platform or broadcast slot with no cinema release plan doesn’t qualify.
- The BFI has to certify the film as a low-budget film, on top of the standard Audio-Visual Expenditure Credit qualifying conditions.
The BFI’s low-budget film test
Passing the standard cultural test isn’t enough on its own. IFTC layers an additional test on top, and a film only needs to satisfy one of three routes through it:
- it has a UK lead writer, either a UK national or resident, or
- it has a UK lead director, either a UK national or resident, or
- it’s certified as an official UK co-production.
Where a film has more than one writer or director, the BFI defines the “lead” as whoever’s contribution in that role is equal to or greater than everyone else’s.
If two co-directors split the work evenly, both can potentially qualify as lead; if one clearly did more, only that person counts. Applicants need to submit an employment contract for the lead writer or director, and if the claim rests on a scriptwriter, a chain of title showing the production company actually holds the rights to the script.
For full detail on how the standard cultural test works alongside this (the points system, the sections, the certification process) see our guide to the BFI cultural test.
3. How much can you claim with Independent Film Tax Credit?
IFTC only applies to the first £15 million of a film’s qualifying core expenditure, no matter how much the total budget is (up to the £23.5 million ceiling).
On top of that, the existing 80% cap still applies: you can claim on 80% of core expenditure, or on the amount of UK core expenditure if that’s lower.
| Figure | Amount |
|---|---|
| Maximum qualifying core expenditure | £15,000,000 |
| Qualifying expenditure after 80% cap | £12,000,000 |
| Credit before tax (53% of £12m) | £6,360,000 |
| Corporation tax on the credit (25%) | £1,590,000 |
| Maximum net cash benefit | £4,770,000 |
A film with a genuine £15 million core spend, all of it used in the UK, tops out at a £6.36 million credit before tax and roughly £4.77 million as cash in hand.
A bigger budget doesn’t buy a bigger credit: past £23.5 million in core expenditure, the film falls out of IFTC eligibility altogether and needs to claim standard AVEC instead.
IFTC vs AVEC
For a film that qualifies for both, IFTC is almost always the better claim, purely on rate: 39.75% net against 25.5% net is a meaningful difference on any budget. The trade-off is the £15 million cap on qualifying spend and the extra conditions around the lead writer, director or co-production status.
Productions with a larger core budget, or ones that don’t clear the low-budget film test, default to standard AVEC instead. There’s no partial claim that blends the two rates on one production: you claim one or the other, based on which set of conditions the film actually meets.
4. What IFTC excludes?
A few restrictions catch productions out, usually because they only show up once someone’s already planned a claim around IFTC:
- No TV. If a production doesn’t have a genuine theatrical release plan, it’s not eligible, however cinematic it might look.
- No stacking with the VFX or animation uplifts. Choosing IFTC means giving up a separate claim for those enhanced rates on the same production.
- No claims before the relevant dates. Expenditure incurred before 1 April 2024, or on a film that started principal photography before that date, falls outside the scheme entirely.
5. How to apply for IFTC and what evidence you’ll need?
The application builds on the standard cultural test process rather than replacing it. Alongside the usual cultural test evidence, the BFI will ask for a certificate of low-budget film status, which needs:
- a full cost report, broken down into core and non-core expenditure,
- details of the lead scriptwriter or director, including their employment contract and an explanation of why they qualify as lead,
- a chain of title document where the claim rests on a scriptwriter,
- a statutory declaration confirming the application is accurate, and
- an accountant’s report verifying both the core/non-core spend split and the lead person’s citizenship or residency status.
Claims themselves go through your Company Tax Return, alongside an additional information form and your BFI certificate. HMRC has accepted claims since 1 April 2025, for expenditure incurred from 1 April 2024 onward.
Because the accountant’s report has to cover both the spend breakdown and the residency condition, it’s worth involving specialist accountants for film and TV productions well before the final cost report is locked, rather than scrambling for evidence after the fact.
6. Getting the right advice for IFTC
WallsMan Creative works with independent film producers who are exactly in this kind of situation and are looking for relief.
IFTC rewards films that plan around its conditions from the start: a realistic core budget under the caps, a clear lead writer or director, and a genuine theatrical release plan. Productions that only discover the £15 million cap or the low-budget test partway through financing tend to lose value they could have planned around.
If you’re structuring a production budget and want to know whether IFTC or standard AVEC gets you the better outcome, get in touch and we’ll work through the numbers with you.
