188体育

The following examples illustrate how film production companies (FPCs) that sustain a surrenderable loss can surrender that loss in return for a payable tax credit (). In each case the production is completed within a single period.

The rate of enhancement applying to all films is 100%, but a maximum of 80% of core expenditure is eligible for relief (FPC55030).

Example 1

An independent FPC makes a film with total core expenditure of 拢10m, all of which is UK expenditure. The film was commissioned by an unrelated distributor which pays 拢9m for it. So in this example

• Income = 拢9m
• Expenditure = (拢10m)
• Pre-FTR profit (loss) = (拢1m)
• Additional deduction - lesser of UK core expenditure (拢10m) and 80% of total core expenditure (80% x 拢10m) = (拢8m)
• Post-FTR profit (loss) = (拢9m)

The surrenderable loss is the lesser of:

• the available loss for the period: 拢9m and,
• the amount of the additional deduction for the period: 拢8m.

In this case, the film production company can surrender up to 拢8m.

The amount of credit due is:

• the payable credit rate 25%
• multiplied by
• the loss surrendered of 拢8m,

giving a payment of 拢2m (assuming that the maximum amount of loss is surrendered). This is equal to 20% of the total core expenditure. The company still has a loss of 拢1m not attributable to FTR.

Example 2

An independent film production company (FPC) produces a film with total core expenditure of 拢100m, all of which is UK expenditure. The film was commissioned by an unrelated distributor which pays 拢105m for it. So in this example

• Income = 拢105m
• Expenditure = (拢100m)
• Pre-FTR profit (loss) = 拢5m
• Additional deduction - lesser of UK core expenditure (拢100m) and 80% of total core expenditure (80% x 拢100m) (UK core expenditure of 拢100m x 80%) = (拢80m)
• Post-FTR profit (loss) = (拢75m)

The surrenderable loss is the lesser of

• the available loss for the period: 拢75m and
• the amount of the additional deduction for the period: 拢80m.

In this case, the film production company can surrender up to 拢75m.

The amount of credit due is:

• the payable credit rate 25%
• multiplied by
• the loss surrendered of 拢75m,

giving a payment 拢18.8m (assuming that the maximum amount of loss is surrendered). This is equal to 18.8% of the total core expenditure. Although the company has made a profit prior to the application of FTR, it now has no corporation tax liability.