Creative Industry Tax Relief

In addition to the existing Film Tax Relief, introduced in April 2007, as of 1 April 2013 some new Creative Industry Tax Reliefs have been introduced by the UK Government.  The new reliefs are aimed at supporting the high-end television, animation and video games industries.  

Companies carrying on qualifying work will be able to claim an additional tax deduction of up to 100% of qualifying expenditure.

Who gets the relief?

The government has chosen to target three specific sectors: “high-end” television production, animation, and video games.  There are various conditions that need to be met in order to qualify for each of the reliefs, but to qualify for any of the creative industry tax reliefs all films, television programmes, animations or video games must pass a ‘cultural test’ which essentially requires that the production is certified as  ‘British’.   (For further details please see the HMRC website: http://www.hmrc.gov.uk/ct/forms-rates/claims/creative-industries.htm#2.)

“High-end” Television Tax Relief

Qualifying programmes include dramas, documentaries and comedies. Provided they meet the British test an additional deduction can be claimed for pre-production, principal photography and post-production expenditure. However, if the television production is an advert, news or current affairs programme, quiz or games show, a broadcast of live events, or a training programme, HMRC will not grant the relief. In order to qualify programmes must also be more than 30 minutes in length with average production costs of £1million or more per hour.

Animation Tax Relief

Similar to the television production relief, any animation programme must be British, and must fit into one of the genres mentioned above. The difference is that to qualify as an animation, 51% of the company’s qualifying expenditure must have been on animation.

Video Games Development Relief

This relief has been subject to much debate recently and is yet to receive EU state approval.   If approval is given the relief will be available as of 1 April 2013.

Tax Credits

In the event that the creative industry tax deduction creates losses for the company these losses can be surrendered in exchange for a payable tax credit calculated at 25% of the surrendered loss.  This may be useful for companies who perhaps have invested a lot of cash into a production, but are yet to receive any returns.

For more information on any of the Creative Industry Tax Reliefs please contact Sarah Brock or Matt Mansell on 01932 830 664 or matt.mansell@wardwilliams.co.uk.