Creative Industry Tax Reliefs/Incentives

Take advantage of screen, games, VFX and animation tax reliefs & incentives

The following are Quick Guides to tax reliefs and incentives for different segments of the creative industries and also looks at the new Audio-Visual Expenditure Credit that is updating the following:

• Audio-Visual Expenditure Credit (AVEC) - update to current reliefs
• Film Tax Relief (FTR) - allows film production companies to claim a cash rebate of up to 25% of UK qualifying expenditure​ (BDO UK )​.
• Animation Tax Relief (ATR) -  provides a rebate of up to 25% of UK qualifying expenditure for animation production​ (KPMG)​.
• High-end Television Tax Relief (HTR) -  available for high-budget TV shows, offering a rebate of up to 25% of UK qualifying expenditure​ (KPMG)​.
• Video Games Tax Relief (VGTR) -  allows video game developers to claim up to 20% of qualifying expenditure​ (GOV.UK)​​ (Deloitte United States)​.
• Children’s Television Tax Relief (CTR): Similar to ATR and HTR, but specifically for children's programming​ (BDO UK )​.
• Visual Effects Tax Relief - to encourage keeping VFX in the UK

(Just to note that it is essential to get expert advice - the following is only a guide and we are not responsible for what is on external websites.)

You may be used to all this information but if not, it is worth being aware as this can help you get investment. If you fancy a chat about any of this, get in touch by calling +44 (0)1382 432483 or +44 (0)7951 380403 or email info@tayscreen.com

So here goes - a quick romp through the credits listed above. 

Audio-Visual Expenditure Credit (AVEC)

In January 2024, the UK Government introduced a new Audio Visual Expenditure Credit (AVEC). Qualifying animated films, animated TV programmes and children’s TV programmes can access relief with a net value of 29.25%. All other qualifying features films and TV programmes can access relief with a net value of 25.5%. Transitional rules apply to film and TV.

AVEC is available to companies with accounting periods ending on or after 1 January 2024. If a company’s accounting period begins before 1 January 2024 but ends after 1 January 2024, it will have the option to apply existing rules on expenditure incurred up to 31 December 2023 and apply AVEC rules on expenditure incurred from 1 January 2024.

Where principal photography begins before 1 April 2025, existing rules remain available up to 31 March 2027. Existing rules will not be available to productions where principal photography commences on or after 1 April 2025.

Qualification criteria for each of the current film and TV reliefs remain unchanged within AVEC including:

UK expenditure on goods/services “used or consumed” in the UK.
Allocating expenditure between UK and non-UK remains on a “just and reasonable” basis.
TV minimum expenditure test is £1m of core expenditure per hour.
The cap of 80% remains and UK core expenditure higher than 80% of expenditure will not generate credit.
Find out more at BFI.

Film Tax Relief (FTR) in the UK

Film Tax Relief (FTR) is a crucial part of the UK's strategy to support its thriving film industry. The relief is designed to encourage film production in the UK by providing financial incentives that make the country a more attractive destination for filmmakers. Here’s an in-depth look at how FTR works, its benefits, and eligibility criteria.

What is Film Tax Relief (FTR)?

Film Tax Relief allows film production companies to claim a payable cash rebate based on the UK expenditure of their film projects. The scheme is aimed at fostering creativity, boosting economic growth, and maintaining the UK’s position as a leading global hub for film production.

Eligibility Criteria

To qualify for FTR, a film must:

1. Pass the Cultural Test or qualify as an official co-production: This ensures the film contributes to the promotion of British culture. The test awards points for various cultural elements such as setting, characters, and heritage.
2. Be intended for theatrical release: The film must be intended for exhibition in commercial cinemas.
3. Meet the minimum UK expenditure requirement: At least 10% of the total production costs must be spent on activities in the UK.
4. Be produced by a UK film production company: The company responsible for the film must be within the UK corporation tax net.

Benefits of Film Tax Relief

1. Cash Rebate: Eligible films can claim a cash rebate worth up to 25% of qualifying UK expenditure. This can significantly reduce production costs and attract international projects to the UK.
2. Encourages Local Production: By lowering the cost barrier, FTR supports domestic productions and helps retain talent within the UK.
3. Economic Boost: The influx of film projects contributes to the local economy by creating jobs and stimulating related sectors such as tourism and hospitality.

How to Claim Film Tax Relief

1. Cultural Test Certification: Producers must apply for and pass the cultural test to certify the film as British. The British Film Institute (BFI) administers this test.
2. Production Spend: Maintain detailed records of all UK expenditure to substantiate the claim.
3. Submit a Tax Return: Film production companies must include the claim in their corporation tax return to HMRC.
4. Receive the Rebate: Once the claim is processed and approved, the rebate is paid out by HMRC.

Practical Example

Imagine a UK-based production company making a film with a total production budget of £10 million, with £6 million spent on qualifying UK expenditure. Under the FTR scheme, the company could claim up to 25% of the £6 million, equating to a £1.5 million rebate.

Key Considerations

• Documentation: Accurate and comprehensive documentation of all qualifying expenditures is essential.
• Timing: Plan the application process carefully to ensure timely submission and receipt of the rebate.
• Professional Advice: Engage with tax advisors or consultants experienced in FTR to maximise the benefits and ensure compliance with all regulations.

Film Tax Relief is a significant incentive for the UK film industry, helping to attract both domestic and international productions. By offering substantial financial rebates, the scheme not only supports the creation of culturally significant films but also bolsters the UK economy.

For more detailed information and guidance on applying for Film Tax Relief, you can refer to resources provided by the British Film Institute (BFI) and the UK Government​ (BDO UK )​​ (GOV.UK)​.

Animation Tax Relief (ATR) in the UK

Animation Tax Relief (ATR) is part of the UK's creative industry tax reliefs, designed to encourage the production of culturally British animation programs. This relief helps to make the UK an attractive location for animation production by offering financial incentives. Here’s an in-depth look at how ATR works, its benefits, and the eligibility criteria.

What is Animation Tax Relief (ATR)?

Animation Tax Relief allows qualifying animation production companies to claim a payable cash rebate on the UK expenditure incurred in the production of animation programs. This scheme is aimed at fostering the growth of the animation sector in the UK by reducing the financial risks associated with production.

Eligibility Criteria

To qualify for ATR, an animation program must:

1. Pass the Cultural Test or qualify as an official co-production: This ensures that the program contributes to the promotion of British culture. The cultural test awards points based on various cultural criteria including content, cultural contribution, and personnel.
2. Be intended for broadcast: The animation must be intended for television or online broadcast.
3. Have at least 51% animation content: The production must consist of at least 51% animated sequences.
4. Meet the minimum UK expenditure requirement: At least 10% of the total production costs must be spent on activities within the UK.
5. Be produced by a UK animation production company: The company responsible for the production must be within the UK corporation tax net.

Benefits of Animation Tax Relief

1. Cash Rebate: Eligible productions can claim a cash rebate worth up to 25% of qualifying UK expenditure, significantly reducing overall production costs.
2. Encourages Local Production: ATR supports domestic production companies and helps attract international projects to the UK, fostering talent and industry growth.
3. Economic Growth: The influx of animation projects contributes to the local economy, creating jobs and stimulating related sectors such as tourism and hospitality.

How to Claim Animation Tax Relief

1. Cultural Test Certification: Producers must apply for and pass the cultural test to certify the animation as British. This test is administered by the British Film Institute (BFI).
2. Production Spend Documentation: Maintain detailed records of all UK expenditure to substantiate the claim.
3. Submit a Tax Return: The animation production company must include the claim in its corporation tax return to HMRC.
4. Receive the Rebate: Once the claim is processed and approved, the rebate is paid out by HMRC.

Practical Example

Consider a UK-based animation studio producing a television series with a total production budget of £5 million, with £3 million spent on qualifying UK expenditure. Under the ATR scheme, the studio could claim up to 25% of the £3 million, equating to a £750,000 rebate.

Key Considerations

• Comprehensive Documentation: Accurate documentation of all qualifying expenditures is crucial.
• Timing of Claims: Plan the application process carefully to ensure timely submission and receipt of the rebate.
• Professional Advice: Engage with tax advisors or consultants experienced in ATR to maximise benefits and ensure compliance with regulations.

Animation Tax Relief is a vital incentive for the UK’s animation industry, making the UK a competitive destination for both domestic and international animation productions. By offering substantial financial rebates, ATR not only supports the creation of culturally significant animation but also stimulates the UK economy.

For more detailed information and guidance on applying for Animation Tax Relief, you can refer to resources provided by the British Film Institute (BFI) and the UK Government​ (BDO UK )​​ (KPMG)​​ (Deloitte United States)​.

High-end Television Tax Relief (HTR) in the UK

High-end Television Tax Relief (HTR) is a part of the UK’s suite of creative industry tax reliefs designed to support and promote the production of high-quality television content. The relief aims to make the UK an attractive destination for the production of high-end TV shows by offering significant financial incentives.

What is High-end Television Tax Relief (HTR)?

High-end Television Tax Relief allows qualifying television productions to claim a payable cash rebate based on their UK expenditure. This initiative helps to lower the production costs of high-budget TV shows, encouraging both domestic and international productions to shoot in the UK.

Eligibility Criteria

To qualify for HTR, a television production must meet the following criteria:

1. Cultural Test or Official Co-production: The production must pass the cultural test administered by the British Film Institute (BFI) or qualify as an official co-production. The cultural test evaluates aspects such as cultural content, contribution, and personnel.
2. Intended for Broadcast: The production must be intended for broadcast on television or online platforms.
3. Minimum Core Expenditure: At least 10% of the core expenditure must be spent on activities in the UK.
4. High-budget Requirement: The production must incur at least £1 million per broadcast hour.
5. Production Duration: The total production must be longer than 30 minutes.
6. UK Production Company: The production must be undertaken by a UK-based television production company liable to pay UK corporation tax.

Benefits of High-end Television Tax Relief

1. Cash Rebate: Productions can claim a cash rebate worth up to 25% of qualifying UK expenditure, significantly lowering production costs.
2. Encourages High-quality Productions: HTR supports the creation of high-budget, high-quality television content, making the UK an attractive destination for such projects.
3. Economic Impact: The scheme stimulates the local economy by creating jobs and boosting related sectors such as hospitality and tourism.

How to Claim High-end Television Tax Relief

1. Cultural Test Certification: Producers must apply for and pass the cultural test to certify the production as British. The British Film Institute (BFI) administers this test.
2. Maintain Detailed Records: Accurate documentation of all UK expenditure is essential to substantiate the claim.
3. Submit a Tax Return: The production company must include the claim in its corporation tax return to HMRC.
4. Receive the Rebate: Once the claim is processed and approved, the rebate is paid out by HMRC.

Practical Example

Consider a UK-based production company working on a high-end TV series with a budget of £10 million, with £6 million spent on qualifying UK expenditure. Under the HTR scheme, the company could claim up to 25% of the £6 million, equating to a £1.5 million rebate.

Key Considerations

• Documentation: Maintain comprehensive and accurate records of all qualifying expenditures.
• Timing: Plan the application process carefully to ensure timely submission and receipt of the rebate.
• Professional Advice: Engage with tax advisors or consultants experienced in HTR to maximise benefits and ensure compliance with regulations.

High-end Television Tax Relief is a vital incentive for the UK's television industry, making the UK an attractive destination for high-budget TV productions. By offering substantial financial rebates, HTR supports the creation of high-quality television content and stimulates the UK economy.

For more detailed information and guidance on applying for High-end Television Tax Relief, take a look at the British Film Institute (BFI) and the UK Government​ (BDO UK )​​ (KPMG)​​ (Deloitte United States)​.

Video Games Tax Relief (VGTR) in the UK

Video Games Tax Relief (VGTR) is a pivotal initiative by the UK government designed to support the video game development industry. By providing financial incentives, VGTR aims to make the UK an attractive hub for video game production, fostering creativity and economic growth within the sector.

What is Video Games Tax Relief (VGTR)?

VGTR allows eligible video game development companies to claim a payable cash rebate on qualifying expenditure incurred during the development of a video game. This tax relief helps reduce the overall production costs and encourages the creation of culturally British video games.

Eligibility Criteria

To qualify for VGTR, a video game must meet the following criteria:

1. Cultural Test: The game must pass a cultural test administered by the British Film Institute (BFI) or qualify as an official co-production. The cultural test assesses aspects such as cultural content, cultural contribution, and the use of British talent.
2. Intended for Supply: The video game must be intended for commercial release to the general public.
3. Development Expenditure: At least 25% of the core expenditure must be spent on goods or services provided from within the European Economic Area (EEA).
4. UK Video Game Development Company: The game must be produced by a video game development company that is within the UK corporation tax net.

Benefits of Video Games Tax Relief

1. Cash Rebate: Eligible companies can claim a rebate of up to 20% of qualifying UK expenditure, significantly lowering production costs.
2. Encourages Domestic Production: VGTR supports the growth of the UK video game industry, attracting both domestic and international projects.
3. Economic Boost: The relief contributes to the local economy by creating jobs and stimulating related sectors such as technology and marketing.

How to Claim Video Games Tax Relief

1. Cultural Test Certification: Developers must apply for and pass the cultural test to certify the video game as British. This process is managed by the BFI.
2. Maintain Detailed Records: Accurate documentation of all qualifying expenditure is essential to support the claim.
3. Submit a Tax Return: The video game development company must include the VGTR claim in its corporation tax return to HMRC.
4. Receive the Rebate: Once the claim is processed and approved, the rebate is paid out by HMRC.

Practical Example

Consider a UK-based video game development company working on a game with a total production budget of £5 million, with £3 million spent on qualifying UK expenditure. Under the VGTR scheme, the company could claim up to 20% of the £3 million, equating to a £600,000 rebate.

Key Considerations

• Documentation: Ensure comprehensive and accurate records of all qualifying expenditures.
• Timing: Plan the application process carefully to ensure timely submission and receipt of the rebate.
• Professional Advice: Engage with tax advisors or consultants experienced in VGTR to maximise benefits and ensure compliance with all regulations.

Video Games Tax Relief is a crucial incentive for the UK's video game industry, making the UK a competitive destination for video game development. By offering substantial financial rebates, VGTR supports the creation of culturally significant video games and stimulates the UK economy.

For more detailed information and guidance on applying for Video Games Tax Relief, you can refer to resources provided by the British Film Institute (BFI) and the UK Government​ (BDO UK )​​ (GOV.UK)​​ (KPMG)​.

Children’s Television Tax Relief (CTR) in the UK

Children’s Television Tax Relief (CTR) is part of the UK’s suite of creative industry tax reliefs aimed at promoting the production of culturally significant children's television programming. This tax incentive is designed to support producers by reducing the financial risks associated with creating high-quality children’s content.

What is Children’s Television Tax Relief (CTR)?

Children’s Television Tax Relief allows qualifying television production companies to claim a payable cash rebate on the UK expenditure incurred in the production of children’s television programs. The aim is to encourage the creation of culturally relevant and high-quality content for children.

Eligibility Criteria

To qualify for CTR, a children’s television program must meet the following criteria:

1. Cultural Test: The program must pass a cultural test administered by the British Film Institute (BFI) or qualify as an official co-production. This test assesses aspects such as cultural content, contribution, and use of British talent.
2. Intended for Broadcast: The program must be intended for broadcast on television or online platforms.
3. Age Target: The program must be primarily intended for an audience under the age of 15.
4. Minimum UK Expenditure: At least 10% of the core expenditure must be spent on goods or services provided from within the UK.
5. UK Production Company: The production must be undertaken by a UK-based television production company liable to pay UK corporation tax.

Benefits of Children’s Television Tax Relief

1. Cash Rebate: Eligible productions can claim a cash rebate of up to 25% of qualifying UK expenditure, significantly lowering production costs.
2. Encourages High-quality Productions: CTR supports the creation of high-budget, culturally relevant children's television content, making the UK an attractive destination for such projects.
3. Economic Impact: The scheme stimulates the local economy by creating jobs and boosting related sectors such as hospitality and tourism.

How to Claim Children’s Television Tax Relief

1. Cultural Test Certification: Producers must apply for and pass the cultural test to certify the program as British. The British Film Institute (BFI) administers this test.
2. Maintain Detailed Records: Accurate documentation of all UK expenditure is essential to substantiate the claim.
3. Submit a Tax Return: The production company must include the CTR claim in its corporation tax return to HMRC.
4. Receive the Rebate: Once the claim is processed and approved, the rebate is paid out by HMRC.

Practical Example

Consider a UK-based production company developing a children’s TV series with a budget of £2 million, with £1.5 million spent on qualifying UK expenditure. Under the CTR scheme, the company could claim up to 25% of the £1.5 million, equating to a £375,000 rebate.

Key Considerations

• Documentation: Maintain comprehensive and accurate records of all qualifying expenditures.
• Timing: Plan the application process carefully to ensure timely submission and receipt of the rebate.
• Professional Advice: Engage with tax advisors or consultants experienced in CTR to maximise benefits and ensure compliance with regulations.

Conclusion

Children’s Television Tax Relief is a vital incentive for the UK’s television industry, promoting the production of high-quality, culturally significant children’s content. By offering substantial financial rebates, CTR supports the creation of valuable programming for children and stimulates the UK economy.

For more detailed information and guidance on applying for Children’s Television Tax Relief, take a look at the British Film Institute (BFI) and the UK Government​ (BDO UK )​​ (KPMG)​​ (Deloitte United States)​.

Visual Effects (VFX) Tax Relief