New reliefs are available to companies within the “creative sector” from 1 April 2013. The creative sector reliefs will provide tax advantages for companies engaged in high end TV programme production, animation production and video game development.
The scheme will be administered by the new HMRC Creative Industry Unit and the detail of the scheme revolves around satisfying key definitions of programme content and eligible costs.
The television tax credit relief will be available where the production has a “culturally British” certificate. This relief gives a super deduction based upon eligible expenditure, or a tax credit repayment if the company is loss making. There is minimum “slot time” of 30 minutes and a minimum expenditure budget of £1 million per hour of show time, although this does not apply to animation companies.
Similar to TV producers, animation companies producing qualifying animated productions can claim an additional deduction in computing their taxable profits. Again, a tax credit surrender relief is available for loss making companies.
Reliefs will be claimed on the company’s tax return which should be filed in the usual way, accompanying statutory accounts and computations and a copy of the relevant British certificate. The Creative Industries Team is aiming to process or repay 98% of claims within 28 days.
Some innovative companies will have to weigh up the benefits of this scheme against other tax breaks available such as the research and development (R&D) scheme or film tax relief (FTR) scheme. This will require an evaluation of the usefulness of these reliefs.
If you require any further information on the availability of these reliefs please contact us.