Could your creative company benefit from a boost to its cashflow? If it produces computer games, films, high-end TV or animation programmes, it may qualify for a new payable tax credit.

The UK’s creative industries make up an incredibly valuable and treasured part of our economy. Collectively, the arts, including film, music and TV are estimated to add £71bn to the UK economy and employ over 1.7m people. Globally, the creative things that we excel at mean we are well respected in these areas with a big influence in the worlds of acting and music.

With this in mind – just to say thanks – we’ve collaborated with one of our partners,  Business-Accountant and Steve Bicknell and Martin Pope have shared some of their expertise so your creative business can maximise the tax relief opportunities that are available.

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All of these products can qualify for extra tax relief if they can be certified as culturally British, and at least a quarter of the core production costs are incurred in the UK. There are some other conditions:

– only businesses trading as companies can qualify for the tax relief, not individuals or partnerships; and
– the product must be intended for release to, or to be broadcast to the general public, not produced for training or advertising purposes.

High-end TV programmes are essentially quality drama; not news, current affairs or quiz shows. Unfortunately producing original music doesn’t qualify as a creative product for these tax reliefs.

Let’s take a look at the 5 tax reliefs:

Film Tax Relief (FTR)

Your company will be entitled to claim FTR on a film as long as:

  • the film passes the culture test – it is considered a ‘British film’
  • the film is intended for theatrical release
  • at least 25% of the total production costs relate to activities in the UK

Animation Tax Relief (ATR)

Your company will be entitled to claim ATR on an animation programme if:

  • the programme passes the cultural test – a similar test to that for FTR but within the European Economic Area
  • the programme is intended for broadcast
  • at least 51% of the total core expenditure is on animation
  • at least 25% of the total production costs relate to activities in the UK

High-end Television Tax Relief (HTR)

Your company will be entitled to claim HTR on a programme if:

  • the programme passes the cultural test – a similar test to that for FTR but within the European Economic Area
  • the programme is intended for broadcast
  • the programme is a drama, comedy or documentary
  • at least 25% of the total production costs relate to activities in the UK
  • the average qualifying production costs per hour of production length is not less than £1million per hour
  • the slot length in relation to the programme must be greater than 30 minutes

Video Games Development

Your company will be entitled to claim VGTR as long as:

  • the video game is British
  • the video game is intended for supply
  • at least 25% of core expenditure is incurred on goods or services that are provided from within in the European Economic Area (EEA)

Theatre Tax Relief

Launched 1st September 2014.

The relief will provide an additional corporation tax deduction, or a payable tax credit, worth up to 25% of qualifying expenditure for touring productions and 20% for all other productions.

The UK theatre sector is a key attraction for tourism, with visiting tourists spending at least £856 million a year on arts and culture.

 

Basically the reliefs all work in broadly the same way: the company can claim an extra 100% deduction for up to 80% of the core production costs. Say the company spends £100,000 in the UK on producing a TV animation programme, if the tax relief applies it would claim an enhanced deduction for those core costs of £180,000.

If your company makes a loss after this deduction, that loss can be surrendered for a payable tax credit. Our tax experts can guide you through the detail of these new tax reliefs.

 

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Want to know more ways to improve your cashflow? Read our blog on the topic:

Cashflow management tips