To support the creative industry in creating more culturally relevant exhibitions, films, theatre productions, TV programmes and games, the UK tax system has creative sector tax reliefs. For each creative sector, the conditions required to qualify vary.
Tax Relief
Helping creative industries claim tax relief
At home and abroad, Britain is celebrated for its creative output. Projects such as the multi-award-winning movie 1917, Gravity, Netflix’s The Crown, and BBC TV series Killing Eve are only few of the productions that have benefited from a form of Creative Industries Tax Reliefs. Creative Industries Tax Reliefs are a group of eight Corporation Tax reliefs similar to R&D tax relief, which allows qualifying companies to claim a cash tax credit on eligible expenditures. In each industry, the eligible expenditure can vary. These reliefs were introduced to help UK businesses in these highly skilled and innovative sectors to thrive at home and abroad.
Speaking of the Creative Industries Tax Relief, the Financial Secretary to the Treasury Jess Norman said, “the arts and creative industries make a vital contribution to the UK economy. These tax reliefs have helped support some astonishing and exciting work, and celebrate the very best of British culture”.
The introduction of this relief was meant to support and promote culturally-relevant productions in the UK, and to incentivise further investment into the creative sector as well as to ensure that the UK remains the world leader when it comes to supporting creativity. In order to qualify for this relief, all projects must pass the cultural test as well as meet other eligibility criteria outlined in detail below.
Children's Television Tax Relief
Passing the cultural test
All film, animations and television programmes or video games must be certified as british.
Applications for the certificates are administered by the British Film Institute (BFI) on behalf of the Department of Culture Media and Sport. The Cultural Test is a points-based test with sections relating to content, cultural contribution, location and cast and crew. To pass the cultural test, the minimum number of points each project must achieve varies between different reliefs, with video games and animation programmes requiring a minimum of 16 out of the possible 35 points, while film, high-end television and children’s television programmes needing a minimum of 18. The sections are: cultural content, cultural contribution, cultural hubs and local practitioners.
BFI can issue two types of certificates:
An interim certificate: This would allow the company to claim tax relief in advance before the work is completed on costs that have been incurred thus far. This may be beneficial if the project requires a cash injection before it can be completed. If you have an interim certificate, you will need to apply for the full certificate once the project is finished.
A final certificate where production has finished
Who can claim?
To claim creative industry tax relief, a company must satisfy a number of criteria:
Liable to Corporation Tax
Directly involved in the production, development and/or testing of:
Films
High-End television
Children’s television
Animation television
Video games
Theatrical productions
Orchestral concerts
Museum or gallery exhibitions
Involved in the decision-making
Directly negotiates, contracts and pays for rights, goods and services
Your company must have responsibility throughout development, from the start of pre-production until the completion of the film, programme or game.
For theatrical productions, orchestral concerts or exhibitions, the company must be responsible for producing, running and closing the production. Although activities can be subcontracted to third parties, there is a limit on the amount of qualifying expenditure that can be claimed. Individuals, partnerships and limited liability partnerships cannot claim as they are not subject to corporation tax.
Benefits of claiming:
Reduce the cost of production and development
Reduce how much corporation tax the company pays or receive a tax cash credit
Helps companies take on greater risk, higher more talent, create even more visionary projects and facilitate jobs
How much can you claim as tax relief?
The criteria to qualify for the tax relief differs for the different sectors. Scroll down to your sector to find out what your project must do to qualify for relief and what you can expect to receive.
The creative industry tax relief provides either a reduction in corporation tax paid (or payable) if the company is profitable, or if it is a loss-making company, then a cash payment from HMRC. Tax relief is available at the corporation tax rate for that year. Currently, the United Kingdom's corporation tax rate is 19%. If the company is loss-making then it can surrender its losses at a rate of 25% as a payable cash credit to the company. This is intended to provide a cash boost for a business that is before revenue and potentially heavily involved in the development stage. The relief is capped at 80% of the core expenditure so, for example, if you had 100% of qualifying expenditure, you would only be able to claim relief on up to 80% of that.
For example: If a company spends £100,000 on EEA core expenditure (and nothing outside the EEA) then £80,000 would be available as an enhancement. For a profitable company, this would make the relief £15,200, whereas a loss-making company would be able to claim £20,000 as credit, which is a substantial amount for any project pre-revenue.
Do you create video games?
What is Video Games Tax Relief?
What are qualifying expenditures?
A Video Games Development Company can claim a maximum enhancement by the lesser of:
- Qualifying EEA expenditure (which would be at least 25% and above); or,
- 80% of the total qualifying expenditure
Expenditure that is allowed:
- Designing, producing, certain overheads and testing the video game.
Expenditure that you can't claim for:
- Concept design, debugging, maintenance and advertising.
Are you a Video Games Development Company that is looking to claim video game tax relief?
What games qualify?
All video games can qualify, except those produced for advertising, promotional purposes or for the purpose of gambling. However, there are some conditions that need to be met in order to receive the tax relief.
Your game should be intended for the general public
The game could be for any platform, including consoles, PCs and games for smartphones, tablets and other mobile devices.
Certified as culturally a British video game
The cultural test for video games is set out in The Cultural Test (Video Games) Regulation 2014.
At least 25% of production costs are incurred in the European Economic Area (EEA)
This means that at least 25% of core expenditure, such as on labour, goods and services need to be from within the EEA.
Are you a film maker?
What is Film Tax Relief?
Similar to the video games tax relief, it is part of the creative industries tax relief scheme intended by the British government to support the industry. Since the introduction of the relief in 2007, 3,470 films have made claims, accounting for £18.4 billion of UK expenditure. Some films make several claims during the production process. You can also make one claim to cover several films. A total of £3.9 billion had been paid to 6,080 claims since the introduction of this tax relief.
When it comes to the film industry, the United Kingdom enjoys a first-rate reputation, with some international box office hits such as Gravity (received a BAFTA in 2014 for Outstanding British Film), The King’s Speech, Thor: Ragnarok and The Martian to mention a few. One of the things that attracts filmmakers to the United Kingdom is the generous tax incentives alongside world class talent, specialist and post-production facilities. You can either be the sole production company of a film or a film could be produced under the terms of an international co-production agreement between two or more countries or authorities.
One of the benefits of making a film as an official co-production is that the producers are able to have access to the support provided to national films in each of the co-producing countries, including, where appropriate, tax relief. However, in order to be able to claim UK’s film tax relief, a co-production must be certified as British by meeting either:
- one of the UK’s international bilateral co-production agreements; or
- the European Convention on Cinematographic co-Production (ECCC)
What are qualifying expenditures?
A Film Production Company can claim a maximum enhancement by the lesser of:
- At least 10% of the total production costs relate to activities in UK
- 80% of the total qualifying expenditure
Expenditure that is allowed:
- Pre-production, principal photography, costs of computer-generated imagery (CGI), post-production
Expenditure that you can't claim for:
- Script writing relating establish viability of the project, development, distribution, insurance and other non-production activities
Are you a Film Production Company that is looking to claim film tax relief?
What films qualify?
Minimum of 10% core expenditure spent in the UK
The 10% threshold for UK expenditure is uniquely for film tax relief, as commonly its 25% core expenditure anywhere in the EEA.
Film must be intended for theatrical release
Passes the cultural test or qualifies as an official co-product
BFI research has shown that every £1 given in tax relief, whether film or high-end TV production in the UK generates more than £7 in return for the UK economy.
“The UK film and high-end TV tax reliefs have been absolutely crucial in terms of supporting the UK production industry. On 1917 alone, we were able to give employment to over 1,200 crew and more than 1,000 cast, stunt performers and supporting artists. As well as the direct employment a major film creates, there is also a large economic benefit for the regions where shooting takes place. In the case of 1917, we shot across the UK in 12 separate locations, from Glasgow down to Salisbury Plain.”
pippa harris
Producer of the three-time oscar winning movie = 1917
Do you create high-end television programmes?
What is High-end Television Tax Relief?
Since the introduction of the relief in 2013, 635 programmes have made claims, accounting for £8 billion of total expenditure. A total of £1.1 billion has been paid out in response to 1,065 claims since High-end Television Tax Relief was introduced. UK’s television industry has a truly global reach and appeal, producing thousands of hours of content each year. Some of the popular UK made tv series, such as Downton Abbey, Game of Thrones, The Crown and more are enjoyed worldwide.
Similarly to the film tax relief, a company can either product a tv show on their own or together with another company as a co-production. Same rules must be followed as outlined above in the film tax relief section.
What are qualifying expenditures?
A TV Production Company can claim a maximum enhancement by the lesser of:
- At least 10% of the total production costs relate to activities in UK
- 80% of the total qualifying expenditure
Expenditure that is allowed:
- Pre-production, principal photography, costs of computer-generated imagery (CGI), post-production
Expenditure that you can't claim for:
- Bond, financing, book rights, development, entertainment, marketing, publicity, insurance
Are you a TV Production Company that is looking to claim high-end television tax relief?
What tv programmes qualify?
Minimum of 10% core expenditure spent in the UK
The 10% threshold for UK expenditure is uniquely for film tax relief, as commonly its 25% core expenditure anywhere in the EEA.
TV programme must be intended for broadcasting
TV programme is a drama, comedy or documentary
News, current affairs, discussion programmes such as games, panels, competition shows and chat shows do not qualify.
Passes the cultural test or qualifies as an official co-product
Average qualifying production cost per hour must be at least £1 million
Six 25 minute episodes commissioned together would also qualify as long as the average core spend was at least £1 million per slot hour.
At least 30 minute episodes
However, individual episodes of 30 minutes or less can qualify for the tax relief if commissioned together
“The UK is a creative powerhouse for producing many award-wining films, shows and video games enjoyed by millions globally. It is home to incredible success stories such as James Bond, Batman: Arkham, The Crown and Horrible Histories demonstrating that Britain is a hub for creativity. These fantastic statistics show investment in our screen industries is booming and government is committed to supporting their continued success through our tax reliefs and modern industrial strategy, which is helping our creative sectors go from strength to strength.”
Marjot James
Minister for the Creat
Do you create children's television programmes?
What is Children's Television Tax Relief?
The UK children’s media industry is filled with new initiatives, programmes and ideas, which are renowned for their creativity and storytelling. UK’s Creative Industry Tax Relief continues to help make Britain the best place to build creative partnerships and facilitate business in the kids media space. As different entertainment providers battle for the attention of children, initiatives like the Children’s Television Tax Relief allows companies to develop high quality children’s programmes.
Children’s television programme is an extension of the high-end television relief, which aims specifically for the producers of children’s television programmes. A programme is considered a children’s programme if its primary audience is expected to be under the age of 15. Since the introduction of the relief in 2015, 200 programmes have made claims, accounting for £219 million of UK expenditure. and is an extension of the high-end television relief that is aimed specifically for the producers of children’s television programmes. In 2018-2019, 30 British Children’s TV programmes were completed, with UK expenditure of £69 million.
What are qualifying expenditures?
A TV Production Company can claim a maximum enhancement by the lesser of:
- At least 10% of the total production costs relate to activities in UK
- 80% of the total qualifying expenditure
Expenditure that is allowed:
- Pre-production, principal photography, post-production, and delivery of the complete programme
Expenditure that you can't claim for:
- Bond, financing, book rights, development, entertainment, marketing, publicity, insurance
Are you a TV Production Company that is looking to claim high-end television tax relief?
What tv programmes qualify?
Minimum of 10% core expenditure spent in the UK
At least 51% live action (animation programmes for children qualify under the Animation Programme Tax Relief)
TV programme is a children's programme if the primary audience is under the age of 15
News, current affairs, discussion programmes and chat shows do not qualify. Quizzes and game shows may qualify if the prize total doesn't exceed £1000.
Passes the cultural test or qualifies as an official co-product
Intended for broadcast, which can include internet broadcast
Do you create animated programmes?
What is Animation Tax Relief?
The UK animation industry is renowned for the development and use of innovative techniques and technology. With world-class talent offering expertise in a wide range of specialisms from traditional, stop-motion and computer animations, the UK animation industry is appreciated globally. Since the introduction of the relief in 2013, 230 animations have made claims, accounting for £412 million of UK expenditure. In 2018-2019, 40 British animations claimed animation tax relief (ATR), with UK expenditure of £106 million. UK animation industry is well known globally for producing short film animations such as Oscar-winning Wallace & Gromit and other iconic programmes such as Peppa Pig and Thomas & Friends.
What are qualifying expenditures?
A TV Production Company can claim a maximum enhancement by the lesser of:
- At least 10% of the total production costs relate to activities in UK
- 80% of the total qualifying expenditure
Expenditure that is allowed:
- Pre-production, principal photography, post-production, and delivery of the complete programme
Expenditure that you can't claim for:
- Bond, financing, book rights, development, entertainment, marketing, publicity, insurance
Do you create animated programmes and are looking to claim animation tax relief?
What animations qualify?
Minimum of 10% core expenditure spent in the UK
Prior to 1 April 2015 this figure was 25%.
At least 51% of the total core expenditure is on animation
Most animations qualify
Animations for news, current affairs, discussion programmes such as games, panels, competition shows and chat shows do not qualify.
Passes the cultural test or qualifies as an official co-product
Intended for broadcast
“These reliefs are often a key part of financing, and some projects simply would not have been produced had they not been available. This helps us to. continue to produce in the UK and develop and nurture talent.”
