IFTC vs AVEC: Which Is Best for Your Small Production?

The Independent Film Tax Credit offers a headline rate of 53% versus AVEC's 34%. On paper, that looks like an easy decision for any small production that qualifies. In practice, it depends on your budget, your Cultural Test profile, and one requirement that catches many independent producers off guard: an Accountant's Report that can cost a minimum of £3,000.

This article explains how the two schemes work, what the IFTC actually requires beyond the standard AVEC criteria, and how to decide which route genuinely delivers more value for your production.

What are AVEC and the IFTC?

The Audio-Visual Expenditure Credit (AVEC) is the main UK film tax credit, introduced in 2024 to replace Film Tax Relief. It's available to film production companies (FPCs) making British-certified films intended for theatrical release, with at least 10% of core costs spent in the UK. The credit rate is 34% of qualifying expenditure (or 39% for animation).

The Independent Film Tax Credit (IFTC) is an enhanced version of AVEC, targeted at lower-budget productions. Films with a total budget of up to £15 million (or core costs of up to £23.5 million) can access the uplifted rate of 53%. The IFTC was introduced alongside AVEC to support homegrown British film production and bring UK incentives closer to the rates offered by other countries.

Both schemes are claimed through the Company Tax Return (CT600), accompanied by an Additional Information Form (AIF) and a BFI certificate confirming the film qualifies as British. That much is the same. What differs are the eligibility conditions for the IFTC, and one additional compliance requirement that has a real cost attached.

What more does the IFTC require?

To access the higher rate, a production have a "Modified Creative Connection." This means either:

• the director and/or screenwriter is a British citizen or resident, or
• the film is an official British co-production.

For many small productions, a British director or writer is simply a fact of the project. But satisfying that condition on paper is not the same as proving it to HMRC.

If your production is not an official co-production, you will need an Accountant's Report signed by a BFI-registered auditor to demonstrate the nationality or residency of your director and/or screenwriter. This is not optional documentation you keep on file for a potential enquiry. It’s a requirement of the scheme.

In our experience, an Accountant's Report of this kind costs a minimum of £3,000.

Does the 53% rate cover that cost?

That depends on your budget. Here is what it looks like across two scenarios:

Company A has £500,000 in qualifying core costs, all in the UK. It claims IFTC on 80% of its core costs (£400,000) at 53%, receiving an expenditure credit of £212,000 before corporation tax. Under AVEC at 34%, the same production would receive £136,000. The difference is £76,000. After paying £3,000 for the Accountant's Report, IFTC is clearly the better route.

Company B has £20,000 in core costs, of which £15,000 are in the UK. Its IFTC claim on £15,000 (the lower of 80% of core costs or the UK core costs) at 53% generates £7,950; under AVEC at 34%, the same base gives £5,100. The uplift is approximately £2,850. However, after the Accountant's Report cost of £3,000, Company B actually loses money with the IFTC.

Where the numbers get tighter is at the very low end of the budget scale. For micro-budget features with qualifying expenditure below roughly £20,000, the additional credit you get with the IFTC can approach or fall below the cost of the report.

In most cases, the IFTC will offer some uplift beyond what you could receive with the standard AVEC calculation, but micro-budgets or productions with very low UK costs should run a model on this

The Cultural Test: plan this before anything else

Both AVEC and IFTC require BFI certification, which means passing the BFI Cultural Test with a minimum of 18 points out of 35. The test has four sections:

• Section A: cultural content
• Section B: cultural contribution
• Section C: cultural hubs
• Section D: cultural practitioners

Section D is where the IFTC's Modified Creative Connection is tested. This is the section that assesses the nationality and residency of your director and screenwriter. Any company claiming through the IFTC will need to pay for an Accountant’s Report for this section.

If you’re claiming through AVEC and your production can reach 18 points through Sections A and B alone, you do not need to rely on Section D, and the Accountant's Report requirement for Cultural Test purposes falls away entirely. That is the outcome worth targeting.

However, if your point-scoring requires Section C or D to reach the pass mark, an Accountant's Report may be unavoidable regardless of which scheme you claim under. In that case, the £3,000 cost becomes a fixed overhead of claiming either way. And if the report is already required for BFI certification, applying for the IFTC at the same time adds no meaningful additional cost. In that situation, the higher rate is straightforward to justify.

For companies claiming under AVEC, make sure you map your Cultural Test strategy early, prioritise Sections A and B, and only move to Sections C or D if you genuinely need the points.

Which scheme is right for your production?

There is no single answer, but there are clear indicators:

IFTC is likely the better choice if:

• Your budget is below £15M or you have less than £23.5M core costs
• Your director and/or screenwriter is British or your production is an official co-production
• Your qualifying UK core expenditure is enough that the uplift exceeds the Accountant's Report cost

AVEC may be the better choice if:

• Your budget is modest and the net uplift from IFTC is marginal after the Accountant’s Report
• You can reach 18 Cultural Test points through Sections A and B without needing Section D

What is consistent across every scenario: model the numbers before you commit. You should have accurate estimates for your qualifying expenditure, your corporation tax rate, and the full cost of your claim including professional fees and any Accountant's Report.

Key takeaways

• AVEC pays 34%; IFTC pays 53%, but the IFTC requires additional eligibility conditions and, in most cases, an Accountant's Report from a BFI-registered auditor.
• The Accountant's Report costs a minimum of £3,000 in our experience. For smaller productions, this can reduce or eliminate the net advantage of claiming IFTC over AVEC.
• If you need Cultural Test Sections C or D to reach 18 points, an Accountant's Report may be required regardless of scheme.
• Budget modelling before production begins is the critical step. Know your numbers before you spend them.

If you're working on an independent film and want to understand which scheme gives your production the best return, don't leave it to chance. Myriad's team works with productions across the UK on AVEC and IFTC claims, from BFI certification through to CT600 submission. Contact us to talk through your specific situation.