If you’re in the creative industry, you may be able to benefit from a host of tax relief schemes — and you might not even realise it.
From tax relief for film studios to museums, here’s a summary of what you can claim through the creative industry tax relief scheme, and how it can benefit your organisation.
What are creative industry tax reliefs?
Creative industry tax relief is a group of eight corporation tax reliefs that allow qualifying companies to claim a deduction on their pre-tax profits or tax credit to reduce the amount of corporation tax they owe.
The programme is designed to promote cultural productions and displays in the UK, attract companies to create projects in the country, and help the creative industry as a whole.
It seems to be doing the job, with Government research suggesting 38% of film productions would not have happened in the UK between 2017 and 2021 without film tax relief — one of the eight individual reliefs that make up the entire scheme.
The different schemes are:
- film tax relief
- animation tax relief
- high-end television tax relief
- children’s television tax relief
- video games tax relief
- theatre tax relief
- orchestra tax relief
- museums and galleries exhibition tax relief.
What you could get
Companies broadly receive the same tax deduction or credit in each specific scheme, which is the lower of:
- 80% of total core costs
- the amount of core costs incurred in the UK (also the European Economic Area for video game, theatre, orchestra, and museum and galleries tax relief).
If you make a loss, you’ll usually be able to surrender some or all of it for a payable tax credit of 25%. The outlier for this is museum and galleries tax relief — the rate is usually 20%, but 25% for touring exhibitions.
Are you eligible?
There are a number of eligibility requirements your company needs to pass to be able to claim creative industry tax relief. To apply, companies must generally:
- be liable for corporation tax
- be directly involved in the production and development of qualifying activities.
Furthermore, all films, television programmes, animations and video games must pass a cultural test with the British Film Institute (BFI) to qualify for tax relief.
These tests reward points for things like where the lead characters come from, the extent to which the story is based on a British subject matter, and where key personnel involved in the production are from. Score enough points, and your production will receive certification as British, and you’ll qualify for tax relief.
Co-productions may also apply for tax relief, but you must apply at least four weeks before principal photography/key animation begins. Make sure to read all the guidance from the BFI, too.
Theatrical productions, orchestral concerts, and exhibitions don’t have to pass any cultural test to apply for tax relief.
Creative industry tax relief is complex
However, eligibility is not just as simple as the cultural test. For instance, to claim film tax relief, at least 10% of your core costs must relate to activities in the UK. This is also true for animation tax relief, with the added requirement that 51% of core costs be spent on animation.
Meanwhile, orchestral production will only qualify if you have 12 performers or more; furthermore their instruments must not be electronically amplified and the main objective of the performance should not be to take a recording.
Therefore, if you’re thinking of claiming creative tax relief, make sure you read all the rules and regulations behind them to make your claim watertight.
How to claim creative industry tax relief
You can claim creative industry tax relief on your company tax return, providing the deduction or credit due to your company, as well as evidence to support your claim.
Want to get your claim right the first time to get the tax relief you’re due? Make sure to get in touch with an accountant who can help.
As a Bristol-based accountancy firm, we’ve worked with a lot of creative businesses before, helping them save valuable money through creative industry tax reliefs. Now, we’re ready to help you.
Get in touch with us for help with your creative industry tax relief claim.