UK Poised to Become Global Indie Film Powerhouse with New Tax Credit

In a captivating keynote address at the Film London Production Finance Market (PFM), John Graydon, senior partner at leading film and TV accountancy firm Saffery, shared his optimistic vision for the UK's independent film industry. Graydon highlighted the transformative potential of the newly introduced Independent Film Tax Credit (IFTC), which he believes will position the UK as a hub for international co-productions.

Unlocking the Potential of the UK's Independent Film Sector

The Game-Changing IFTC

The IFTC, an enhanced expenditure credit of 53% that equates to approximately 40% in tax relief on eligible spend, has already caught the attention of international partners. Graydon noted that this generous incentive is a significant draw for co-productions, stating, "You can already see the shift. That 40% is very attractive [to international partners]. My own perception is [co-productions] are going to come back in favour very quickly. In fact, I think they already are."Graydon emphasized the profound impact of the IFTC, describing it as "the biggest news in the independent film community" in his nearly 30-year career in the sector. He believes the tax credit will "make a really big difference" in the industry, attracting a surge of international projects to the UK.

The Rise of UK-Based Horror

Graydon also predicted that the UK could become a prime destination for US and international horror productions, particularly from companies like Blumhouse and Black Bear. He explained that the IFTC's favorable terms, combined with the model of having a decent star and a relatively modest below-the-line spend, make the UK an appealing location for these types of projects."I do think we might become the home of horror," Graydon stated. "The model of having a decent star and a relatively modest below-the-line spend keeps you well below the £15m [threshold] and getting 40% is quite compelling. I don't feel that we will necessarily see more studio work but I think we will see more US indies come across [to make films in the UK]."

Reviving the Role of EIS

Graydon also called for a re-examination of the Enterprise Investment Scheme (EIS), a government-backed initiative that was previously popular in the 2010s but has since faced a crackdown due to concerns about risk. Graydon believes that for the independent film industry to thrive, there needs to be a mechanism to encourage investors to take on the inherent risks."EIS is a government-produced piece of legislation that is meant to encourage investment in risky businesses," Graydon noted. "It was very popular in the 2010s. Then it was subject to a clampdown from government because they didn't like the lack of risk."Graydon argued that while the tax credit is a valuable tool, it alone won't be enough to attract investors. He advocated for "some debate with government" about how EIS could potentially be retooled to once again support single-picture projects, providing an additional incentive for investors to participate in the independent film ecosystem.

Cautious Optimism for the Future

Despite the industry's recent challenges, as highlighted in the British Screen Forum report, both Graydon and Coutts & Co's Judith Chan expressed cautious optimism about the future of independent filmmaking in the UK. Graydon acknowledged that the road ahead will remain challenging, but he believes the industry is poised for improvement."My perception is that there are a lot of people who want to invest in film…[but] there needs to be a funnel, a place where you can go," Graydon said. He believes that as more interest and investment flow into the UK, and producers have access to a wider range of projects, both their own and those of others, a more sustainable business model will emerge.Graydon's keynote address at the PFM event, which brought together 117 producers/filmmakers and 68 financiers, underscored the industry's collective determination to navigate the evolving landscape and capitalize on the opportunities presented by the IFTC and other policy initiatives. With a renewed sense of optimism and a focus on fostering international collaborations, the UK's independent film sector appears poised to cement its position as a global powerhouse.