Tax Relief for Creative Sector
All the world may be a stage and we may all still be just players to paraphrase Shakespeare, but things have moved on a bit since his day.
These days the creative industries encompass a range of activities, many based on technology and innovative processes. We’re now also talking film and TV production, video gaming, musicals and stage productions through to interactive and informative exhibitions in museums and galleries. The creative sector encompasses a wide range of businesses and their people with technical expertise who contribute to the end product for an audience to enjoy.
A BIT ABOUT THE CREATIVE SECTOR
Did you know the creative industries contribute £108 billion to the UK economy every year, according to government figures, employing around 2.3 million people. This sector has seen growth at a rate of 1.5 times the rate of the wider economy over the past decade. In recognition of this valuable contribution, and to further bolster home grown talent within the Global market, the government has recently set out a new vision to grow the creative reliefs sector to £50 billion, with 1 million extra jobs, by 2030, by pledging £75 million in additional funding on top of the £230 million delivered since 2021. You can find out more about the impact and vision for this sector in the government’s report Creative Industries Sector Vision published in June 2023.
A major element of this funding is Creative Industry Tax Reliefs, these reliefs are aimed at supporting companies to innovate through the development of creative talent and technology.
This is where we can help, by working out if your business qualifies and with accessing the tax relief.
WHO CAN APPLY?
The reliefs operate to provide additional tax relief in key sectors as listed below:
Museum & Gallery
Video game
Film
Theatre
High end TV
Orchestra
Animation
Children’s TV
The reliefs and an additional deduction from taxable profits of up to 80% of qualifying production expenditure (what you spend to make the film, TV program, exhibition…) is made through the company’s tax return. The additional relief can reduce the company’s tax liability or, if tax losses are generated, result in a payable tax credit of up to 25% value of the losses.
Certain conditions must be met before a company can claim for these additional reliefs. These conditions vary between sectors and include cultural stipulations for claims in the film, television, and video games industries (generally designed to concentrate the activities and expenditure to the UK).
WHAT IS MUSEUMS AND GALLERIES EXHIBITION TAX RELIEF?
A qualifying exhibition that is considered the be of interest either scientifically, historically, artistically, or culturally. With at least 25% of the ‘core’ costs related to activities in the UK or European Economic Area.
THE BENEFITS
You can claim an additional deduction to reduce your profits or increase a loss. This deduction is the lower of 80% of the total core costs or the amount of UK core costs. If you make a loss, it can be surrendered for a payable tax credit of 25% for touring and 20% for non-touring productions. See our article on the changes in rates as these have been increased.
WHAT IS VIDEO GAMES TAX RELIEF?
A video game certified as British that is intended for supply to the general public with at least 25% of the ‘core’ costs related to activities in the UK or European Economic Area (EEA).
THE BENEFITS
You can claim an additional deduction to reduce your profits or increase a loss. This deduction is the lower of 80% of the total core costs or the amount of UK core costs. If you make a loss, it can be surrendered for a payable tax credit of 25%.
WHAT IS FILM TAX RELIEF?
A film certified as British that is intended for theatrical release with at least 10% of the ‘core’ costs related to activities in the UK.
THE BENEFITS
You can claim an additional deduction to reduce your profits or increase a loss. This deduction is the lower of 80% of the total core costs or the amount of UK core costs. If you make a loss, it can be surrendered for a payable tax credit of 25%.
WHAT IS THEATRE TAX RELIEF?
A play, opera, musical or other dramatic piece that tells a story, or ballet that is provided to paying members of the general public or for educational purposes with at least 25% of the ‘core’ costs related to activities in the UK or European Economic Area.
THE BENEFITS
You can claim an additional deduction to reduce your profits or increase a loss. This deduction is the lower of 80% of the total core costs or the amount of UK core costs. If you make a loss, it can be surrendered for a payable tax credit of 25% for touring and 20% for non-touring productions.
WHAT IS HIGH-END TELEVISION TAX RELIEF?
A drama, comedy or documentary programme certified as British that is intended for broadcast to the general public with at least 10% of the ‘core’ costs related to activities in the UK. The programme must have ‘core’ costs of at least £1million per hour, with a length of at least 30minutes.
THE BENEFITS
You can claim an additional deduction to reduce your profits or increase a loss. This deduction is the lower of 80% of the total core costs or the amount of UK core costs. If you make a loss, it can be surrendered for a payable tax credit of 25%.
WHAT IS ORCHESTRA TAX RELIEF?
An orchestra, ensemble, group or band that consists of at least 12 instruments that is intended to be performed live to the paying public or for educational purposes with at least 25% of the ‘core’ costs related to activities in the UK or European Economic Area.
THE BENEFITS
You can claim an additional deduction to reduce your profits or increase a loss. This deduction is the lower of 80% of the total core costs or the amount of UK core costs. If you make a loss, it can be surrendered for a payable tax credit of 25%.
WHAT IS ANIMATION TAX RELIEF?
An animation programme certified as British that is intended for broadcast with at least 10% of the ‘core’ costs related to activities in the UK and 51% of the ‘core’ costs on animation?
THE BENEFITS
You can claim an additional deduction to reduce your profits or increase a loss. This deduction is the lower of 80% of the total core costs or the amount of UK core costs. If you make a loss, it can be surrendered for a payable tax credit of 25%.
WHAT IS CHILDREN’S TELEVISION TAX RELIEF?
A programme certified as British that is intended for broadcast to a primary audience under the age of 15 with at least 10% of the ‘core’ costs related to activities in the UK.
THE BENEFITS
You can claim an additional deduction to reduce your profits or increase a loss. This deduction is the lower of 80% of the total core costs or the amount of UK core costs. If you make a loss, it can be surrendered for a payable tax credit of 25%.
A FINAL THOUGHT
We think it’s worth noting that the tax credit rates have temporarily increased for theatres, orchestras, museums & galleries in recognition of the impact of Covid-19 on these sectors. The tax credit rates increased to up to 50% for companies in these sectors from 27 October 2021, returning to a tapered level up to 35% in April 2025.
An additional point to note, is that claiming creative Industry Tax Relief can restrict the ability to claim for Research and Development Tax Relief and Research and Development Expenditure Credits. As such, planning would be required if both schemes could potentially come into play. With substantial changes happening in the field of R&D Tax and the Creative Tax Relief schemes.
It’s worth getting in touch to work out which would be the most valuable routes to take for your company. We’ll talk you through the best options and the process.
