The Report’s major recommendations in more detail are:
Challenges for independent film
1. Development: the Committee found that, while the Independent Film Tax Credit has been a game-changer for domestic production, development has not had the same boost. The Committee has recommended that Research and Development (“R&D”) tax relief be expanded to support film and HETV development, as arts and humanities are currently excluded.
2. Access to finance: the Report flags the legislative barriers to private investing in film and HETV. The 2017-2018 changes to the Enterprise Investment Scheme and Seed Enterprise Investment Scheme introduced the ‘risk to capital’ test which plays a part in reluctance amongst equity investors to invest in British indie films. Although HMRC revised its guidance in 2021, the Report highlights that work is still required to bring investors back onside. The Committee recommended that the Government review the impact these legislative changes have made and has requested that it reports its findings to them within six months.
3. Distribution and exhibition: the Committee highlighted that some stakeholders feel British indie films are not sufficiently supported at distribution stage through marketing, meaning as a result that they are not screened in a sufficient number of cinemas. The Committee has therefore recommended introducing a 25% tax relief for the Prints & Advertising costs for films claiming the Independent Film Tax Credit. Under the current rules, such costs (alongside development, financing, and certain insurance costs) are excluded from being eligible for the tax credit.
4. Co-productions: the Report sets out the difficulties in accessing co-production funding from Europe following Brexit. It highlights the strong appetite across the film sector for the UK to reassociate with Creative Europe (the EU’s cultural, creative and audiovisual cooperation programme). The UK Global Screen Fund (the “UKGSF”) was established in 2021 to address the UK’s departure from Creative Europe, but the BFI notes that the UKGSF is “one of the hardest” schemes to secure funding through. The Committee has recommended, therefore, that the Government increase funding for the UKGSF and reassociate with Creative Europe.
Domestic HETV crisis
5. Reform HETV tax relief: the Report notes that the current HETV tax credit regime, equating to a credit of 25.5% of qualifying expenditure post-corporation tax, is the same as for most films. However, sub-£15 million films can claim a rate of 40%. The Committee has recommended that the BFI conducts analysis on the potential design and return on investment of a targeted uplift to the HETV tax credit regime for shows with budgets of £1 million to £3 million per hour, and that the Government commit to introducing the measure if the analysis supports this.
6. Intellectual property ownership: the UK’s public service broadcasters (“PSBs”) (the BBC, ITV, Channel 4, and Channel 5) are required by law to do business on terms of trade when working with independent producers. These enable the producers to retain the IP rights in what they create, with the aim of generating further revenue for the producers from their shows by also selling the rights to other distributors. The Report notes, however, concerns in the industry that subscriber video-on-demand platforms (“SVODs”), such as Netflix and Amazon Prime, do not operate on the same terms and limit the producers’ ability to exploit their programmes on the secondary market. The Report does highlight, however, the benefits of a thriving production environment featuring SVODs, and the risks of deterring the platforms from investing here by amending the current legislative regime. The Committee has therefore recommended that the Government commission research on how regulatory measures similar to PSB terms of trade might be applied to SVOD platforms to ensure indie producers maintain ownership of their shows.
7. Streaming levy: given the current influx of SVOD investment from outside of the UK, to correct the balance between domestic and inward production, the Committee has recommended that a levy on UK subscriber revenue be imposed on SVOD platforms operating in the UK. The Report notes, however, that there is not necessarily a cross-sector consensus on implementing a levy and therefore has recommended that the scheme begin as a voluntary programme, with Government intervention following if there is not full compliance.
Incentivising inward investment
8. Competitive tax credits: the Report notes that the UK’s tax credit regimes are vital for the industry, but flags that they are not necessarily agile enough to keep up with the industry and those of other countries. The Committee uses the VFX enhanced tax credit rate as an example, which was first floated in the autumn of 2023 but was not introduced until January 2025. The Committee has therefore recommended that the Government benchmark the value and eligibility of the tax credit incentives against those of other countries twice per year.
9. Availability of staff and studios: whilst the talent pool of staff in the UK has been a significant draw for inward investment, the Report notes that the rate of training new staff and the availability of studio space has not kept pace. The 40% relief offered in business rate relief for film studios received praise from the Committee, but it noted that the Government should further prioritise the film and HETV sectors and ensure reforms support them.
10. Production hubs: reflecting the recent focus on production hubs outside of London, the Committee has recommended that the Govnerment require productions claiming tax credit relief to report a breakdown of their spending across the nations and regions of the UK to increase transparency.
Impact of AI
11. Maximising potential: the Report considers the balance between encouraging the opportunities AI offers and respecting human creativity. The Committee has recommended that the Government work with the industry to develop an AI certification scheme for the ethical use of generative AI in film and HETV.
12. Risks and challenges: the Committee considered the Government’s recent proposal to introduce a data mining exception to copyright law that would allow AI developers to train their models on material except in cases where rights holders have expressly reserved their rights. It noted that proceeding with this regime may damage the UK’s reputation among inward investors for its gold-standard copyright and IP framework and therefore recommended a model that requires AI developers to license copyrighted works in order to train their models.
13. Performer rights and consent: referencing the 2023 SAG-AFTRA and WGA strikes in the US, the Committee noted that performers are not as well protected as they might be from the use of generative AI technologies, such as unauthorised voice cloning and deepfakes. It recommended legislative reform of the Copyright, Design and Patents Act 1988 to mitigate this risk.
Our thoughts
The contents of the Report are likely to be welcomed by production companies, broadcasters, and distributors. The broad support for increasing tax relief across all areas is a net positive for the entire industry, and the Government will need to take the challenges posed to UK PSBs and the indie film sector seriously.
SVOD platforms, however, will likely be concerned by the suggestion of the implementation of terms of trade and a levy on subscriber revenue. Keeping SVOD platforms onside is essential for the film and HETV industry in the UK to keep thriving. The diversity of the R&D process in the UK between PSBs, commercial broadcasters like Sky, indie and commercial film investors and substantial investment from SVOD platforms is what differentiates the UK from other markets. Whatever policy decision the Government makes following this Report will need to tread a careful line between growing the UK’s domestic production ecology and maintaining the significant amount of inward investment that has developed over the past few years.
In-depth 2025-117
