Creative sector tax reliefs

Nik-HynesAn introductory guide to creative sector tax reliefs by Nik Hynes of Tree Accountancy

Nik Hynes, a partner at Tree Accountancy, introduces the first in a series of four case studies relating to new Government legislation.

HM Revenue & Customs (HMRC) has announced a package of creative sector tax reliefs which it is hoped will result in new investment and initiatives relating to some particular areas of the creative industry. Specifically, the new arrangements will cover:

  • Animation
  • High end television
  • Video games
  • Films

It’s great to see that HMRC isn’t the only ‘publicly-funded body’ (along with the BBC!) that has recognised the region’s strengths in Prolific North’s sector, with the news that it has set up a Creative Industries Team which, as from 1 April 2013, is now based in Manchester.

Tasks and responsibilities for the new team will include accepting and subsequently assessing claims for the reliefs (subject to State aid approval) and providing advice on the reliefs to interested companies and their representatives.

Animation Tax Relief

From 1 April 2013 companies that are directly involved in the production of animation may be able to claim tax relief for qualifying animation expenditure.

The relief will allow companies to claim an additional deduction when calculating their taxable profits.  There is an extra allowance of up to 80 % of the qualifying expenditure i.e. a £100 expense is now £180.  If the extra relief results in a loss, you can surrender those losses for a payable tax credit, equal to 25% of the losses surrendered. This would offer the advantage of an immediate relief on the loss, rather than waiting to carry it forward and offset against future profits.

There are – as always with HMRC – some qualifying criteria, the key one being that the submitting company must be eligible and the production must be certified by the Department of Culture, Media & Sport (DCMS) as culturally ‘British’.

In my next articles, I’ll be outlining details relating to high end television and video gaming gaming. If you’d like to discuss any aspects of the above, please contact me at