Tax Relief for the Creative Sector

Creative Sector Tax Relief

New Program – Creative Sector Tax Credits

From 01 April 2013, UK companies that are involved in the production of animation, high-end television, and video games may qualify for a new form of tax relief. The relief is similar to the R & D tax credit system. It provides:

an additional corporation tax deduction for the production company or developer at a rate of up to 100% of qualifying UK production or development expenditure (or, if lower, 80% of the total qualifying production expenditure); or

a 25% payable cash tax credit, for surrendered losses

To qualify under this new programme:

• an incorporated company must be engaged in the production of such animation programme, high-end television programme or video game
• the content must meet the definition of animated, high-end television, or video game
• the production must be intended for broadcast or commercial release
• the production must be certified as a cultural product by satisfying a UK cultural test (point based system)
• at least 25 per cent of the core expenditure incurred by the production company must relate to expenditure on goods or services that are used or consumed in the UK

Companies already claiming R&D will not be able to claim tax relief twice on the same R&D expenditure. Similarly, where a company claims tax relief in one creative sector, it will not be able to claim relief on the same expenditure in another creative sector.