Part 15Film production

Chapter 3Film tax relief

Additional deductions

1199Additional deduction for qualifying expenditure

(1)

If film tax relief is available to the company, it may (on making a claim) make an additional deduction in respect of qualifying expenditure on the film.

(2)

The deduction is made in calculating the profit or loss of the separate film trade.

(3)

In this Chapter “qualifying expenditure” means core expenditure on the film that falls to be taken into account under Chapter 2 in calculating the profit or loss of the separate film trade for tax purposes.

(4)

The Treasury may by regulations—

(a)

amend subsection (3), and

(b)

provide that expenditure of a specified description is or is not to be regarded as qualifying expenditure.

1200Amount of additional deduction

(1)

For the first period of account during which the separate film trade is carried on, the amount of the additional deduction is given by—

E×Rmath

where—

E is—

  • (a) so much of the qualifying expenditure as is UK expenditure, or

  • (b) if less, 80% of the total amount of qualifying expenditure, and

R is the rate of enhancement (see subsection (3)).

(2)

For any period of account after the first, the amount of the additional deduction is given by—

(E×R)-Pmath

where—

E is—

  • (a) so much of the qualifying expenditure incurred to date as is UK expenditure, or

  • (b) if less, 80% of the total amount of qualifying expenditure incurred to date,

R is the rate of enhancement (see subsection (3)), and

P is the total amount of the additional deductions given for previous periods.

(3)

The rate of enhancement is—

(a)

for a limited-budget film, 100%, and

(b)

for any other film, 80%.

(4)

The Treasury may by regulations amend the percentage specified in subsection (1) or (2).