In a bid to encourage the location of valuable investment in creative industries within the UK, the Government introduced a range of tax incentives from 1 April 2013.
These targeted tax incentives will benefit companies operating within the animation, high-end television and video games sectors producing culturally relevant productions in the UK.
The tax incentive provides production companies within an additional corporate tax deduction worth 100% of the UK qualifying production expenditure. If this additional deduction creates a loss, a company may receive a payable credit from HMRC equal to 25% of the expenditure.
To qualify for the enhanced tax relief, the animation (taken as the ordinary meaning) must be intended for broadcast and may include mixed content productions where the animation makes up 51% or more of total production costs.
The definition of ‘high-end TV’ includes drama and comedy productions as well as high-end documentaries but exclude specific genres such as advertising; discussion, panel and quiz shows and news and current affairs programmes.
The production must be intended for broadcast in a running slot of 30 minutes or more and the production expenditure must exceed £1m per hour of broadcast.
The definition of ‘video games’ takes its ordinary meaning and the production must be intended for commercial release but excludes games with a primary purpose of advertising or gambling.
Importantly, there is no minimum expenditure threshold and early stage costs of production will be qualify.
Our specialists have the expertise and experience to ensure the relief is not only maximised but utilised in the most efficient manner. Our team is quite often involved with the drafting of new legislation, so we are best placed to assist our clients in applying it.