A while back the government introduced a range of target tax reliefs to help support the cultural sector and its contribution to the UK economy. Whilst it’s worth taking a look at these specific reliefs again don’t forget all businesses, whatever their sector might be eligible to claim R&D Tax Relief which you can find out more about on this website.
The way in which tax reliefs work is by increasing the amount of allowable expenditure. Where a company makes a loss, it may be able to surrender the loss and convert some or all of it into a payable tax credit.
In relation to the specific creative industry tax reliefs a company will qualify if it is:
- liable to Corporation Tax
- directly involved in the production and development of certain films
- high-end and children’s television programmes
- animation programmes
- video games
- theatrical productions and orchestral concerts
Companies that produce films and television production companies producing relevant animation and high-end television programmes are subject to special tax rules.
These rules apply to all:
- film production companies producing films (whether or not the films are intended for cinema release)
- television production companies producing relevant animation, children’s or high-end television programmes
- theatrical and orchestral production companies which claim relief
The cultural test
To qualify for creative industry tax reliefs all films, television programmes, animations or video games must pass a cultural test or qualify through an internationally agreed co-production treaty – certifying that the production is a British film, British programme or British video game. In all cases, formal certification is required to qualify.
Certification and qualification is administered by the British Film Institute(BFI) on behalf of the Department for Culture Media and Sport. The BFI will issue an interim certificate for uncompleted work or a final certificate where production has finished.
There are a number of specific Tax Reliefs:
- Film Tax Relief (FTR)
- Animation Tax Relief (ATR)
- High-end Television Tax Relief (HTR)
- Children’s Television Tax Relief (CTR)
- Video Games Tax Relief (VGTR)
- Theatre Tax Relief (TTR)
- Orchestra Tax Relief
All of these are considered to be state aid and for all of these reliefs (except Video Games Tax Relief) when a company receives more than €500,000 a year in state aid, details will be published annually on the European Commission website.
It’s worth noting that in relation to VGTR that if a small or medium sized video games development company has claimed R&D tax relief is claimed on a project, that project can’t claim for any other state aid reliefs (including VGTRand grants). For large companies who carry out research and development and claim under the large scheme, the rules are different. This is because R&D tax relief claimed under the large scheme is not state aid, and therefore the areas of research and development within a project may be eligible for R&D tax relief.
There are other schemes which may benefit companies in the cultural sector. For example the Enterprise Investment Scheme (EIS) provides investors who subscribe for equity in a company conducting qualifying trade generous tax benefits.
The Seed Enterprise Investment Scheme (SEIS) is designed to help small, early-stage companies to raise equity finance by offering a range of tax reliefs to individual investors who subscribe for new shares in those companies.
If you’re a business based within the creative industries sector get in touch today as we may be able to help you with any tax issues and ensure that you are accessing all relevant reliefs available to you.