Creative Sector Tax Relief Benefits

Tune in to the new relief for TV and animation production companies:

Key Points

• New tax reliefs for creative sector businesses.
• A summary of the main elements of the relief.
• Meeting the “culturally British” test.

Differentiating core and production expenditures.
When Wallace and Gromit were thinking of becoming UK tax exiles, there were few tax breaks for the creative sector.

However, much has happened since 2011 and the UK will shortly have “creative sector” tax reliefs in CTA 2009, Part 15A and Part 16. These will provide tax breaks for expenditure incurred by companies within this business sector on or after 1 April 2013.

The incentives are to be rolled out to video game development companies through a mirror scheme of tax credits and enhanced corporation tax deductions. Those proposals are currently awaiting EU state aid approval, but are on schedule to receive Royal Assent in early July.

The creative sector reliefs will introduce tax advantages for companies engaged in: high-end TV programme production; animation production; and video game development.

Popcorn

The breaks for high-end TV and animation production mirror the film tax relief (FTR) regime, which was introduced in 2006.

The new HMRC Creative Industry Unit will have responsibility for the schemes’ administration. Some innovative companies will need to choose between the effectiveness of this and other innovation breaks such as the research and development (R&D) scheme or film tax relief scheme.

Choice of the appropriate creative sector tax opportunity will require an evaluation of the usefulness of these reliefs in the first instance. For example, particularly generous capital allowances …