Many creatives shy away from the detail of tax rules but with the government’s focus on creatives, it’s well worth a look to see if you qualify.
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 aim to support the high-end television, animation and video games industries.
Companies carrying on qualifying work can claim an additional tax deduction of up to 100% of qualifying expenditure.
Which Creative Industries get the Tax Relief?
The government has targeted three specific sectors: “high-end” television production, animation, and video games. Various conditions need to be met 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.
It’s a dry read but it could save you tax so it’s worth it! if you need more information just get in contact: Erin Walls
