Creative Sector Tax Relief - Spring Budget Update

Creative Sector Tax Relief

Following on from the Spring Budget we have created a quick summary of the Creative Sector Tax relief.

Tax reliefs are often complex so we have summarised the main points below. If you are in any of the sectors detailed below and would like further information please do get in touch with us on 01603 700885.

Introduction

The creative industry tax reliefs are corporate tax provisions that provide additional tax reliefs to companies in the following sectors:

• film production
• television production ― television tax relief covering high-end TV, animations and children’s programmes
• video games development
• theatrical production
• orchestral production
• museum and gallery exhibition production

The company must have responsibility throughout development, from the start of pre-production until the completion of the film, programme or game.

For theatrical productions, orchestral concerts or exhibitions, the company must be responsible for producing, running and closing the production.

All films and television programmes or video games must be certified as British. They must pass a cultural test or qualify through an internationally agreed co-production treaty.

Broadly speaking, the activities in relation to the creative industry are treated as a separate trade and there are specific rules for income or losses arising from each activity. Therefore, the income and expenditure incurred for a tax year will be separated out from the regular trading activity.

Relief

As of 1 January 2024, films, TV and video games will receive an above-the-line expenditure credit (similar to RDEC). This will result in a net benefit to companies at a CT rate of 25.5% to 29.5% (depending on the relief claimed). Prior to 1 January 2024 the reliefs were calculated differently. Any new productions up to 31 March 2025 and existing productions up to 31 March 2027 will use the old reliefs.

Theatre, orchestra and museum and gallery exhibition tax reliefs will either:

• Claim an additional corporation tax deduction to reduce the amount of taxable profits of the creative trade

OR

• Surrender losses generated by the creative trade in exchange for a payable tax credit

Relief will be claimed in the company tax return along with supporting evidence provided to HMRC. A claim can be made up to one year after the company’s filing date. Time should be factored in to collate all necessary information and any certificates requested (if required).

Interaction with R&D

A company cannot make an R&D claim and a creative sector relief claim. Depending on the nature of the creative industry tax relief, the company can either choose the relief to claim or only be able to make an R&D claim.

You can check out the Gov.UK guidance here.

Haines Watts

We understand that the world of business and tax can sometimes be complex and potentially overwhelming for any business owner, which is why if you have any queries or questions please do get in touch. Our experts will be able to advise and guide you for your specific tax needs.

You can view our tax planning guide here which provides more information on a wide range of tax topics.