creative industries

A Quick Guide: Creative Industries Tax Relief

Did you know that the creative industries contribute roughly £13 million to the UK economy every hour? This impressive figure is focused solely on the financial benefits that the creative industries bring to the table, let alone the cultural enrichment that they have on our community’s well being and futures. The pandemic has proved just how important the creative industries are to the UK with worries that the industries would not be able to fully recover, but the Government’s new pledge to keep industries such as Theatre, Orchestra, and Museum & Gallery thriving are extremely promising. 

In 2020, there was a 27% increase in tax relief paid out by HMRC, but despite the Government’s efforts at trying to give back to the creative industries, awareness of the CITR tax relief scheme is extremely low, which has resulted in many businesses believing that they are not at all eligible for the scheme, but this is usually not the case. 

What is Creative Industries Tax Relief?

Creative Industries Tax Relief (CITR) is a form of Government State Aid that was introduced in  2012. It aims to reward the creative industries with an increased amount of allowable expenditure, or if your business is loss-making then you may be able to surrender the loss and be rewarded in the form of a payable tax credit. It is made up of a program of different reliefs, which are:

Who can claim?

Businesses will be able to reap the benefits of Creative Industries Tax Relief if they fit the correct criteria. The company must also have responsibility throughout development, from the start to completion of the programme, film or game. For theatrical productions, exhibitions and orchestral concerts the company needs to be responsible for producing, running and closing the production. 

The criteria for eligible businesses is that it must be: 

  • A UK business
  • Subject to pay corporation tax
  • Is directly involved in the production and development of video games, theatrical productions, animated television programmes, high-end television programmes, museum and gallery exhibitions, orchestral concerts, children’s television programmes and films.
  • 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, program or game.
  • For theatrical productions, orchestral concerts or exhibitions, the company must be responsible for producing, running, and closing the production.
  • Passes cultural test

What is a cultural test?

The Cultural test is an objective assessment by the BFI (British Film Institute) of the cultural attributes of a film, television program, or game, ensuring that it is culturally British or qualifies as an official co-production. Working on a points-based system, it measures value in the following areas:

  • Cultural content
  • Cultural contribution
  • Cultural hubs
  • Cultural practitioners

How much can I claim?

The size of the claim will depend on the size of the project, and HMRC provides a unique formula for each creative sector to help you to estimate your claim. The reliefs all generally provide an increased reduction of expenditure for Corporation Tax Relief, the specific rates for each tax relief are:

Animation Tax Relief (ATR)The relief rate is worth up to 25% of your core expenditure for your animation programme, in the form of cashback. 

Children’s Television Tax Relief The relief rate is worth up to 25% of all qualifying expenditure, you can only claim for 80% of your production budget, but there is no cap at all on the amount you can receive. 

Film Tax ReliefThe relief rate is worth up to 25% of qualifying expenditure, in the form of a payable cash rebate, there is a cap for the total you can claim on, at 80% of the qualifying expenditure.

High-End Television Tax Relief The relief rate is worth up to 25% of your core expenditure for the High-End programme, in the form of cashback.

Museum & Gallery Tax ReliefNon-touring exhibitions will qualify for a relief rate of 20%, and touring exhibitions will qualify for up to 25%, with a maximum payable amount being £100,000.

Orchestra Tax ReliefOrchestral concerts will be eligible for tax relief rates of up to 50% of your core expenditure.

Theatre Tax Relief (TTR)Companies can reduce pre-performance costs by 20%-25%, it is important to note that some businesses that already claim corporation tax exemptions can still be eligible to claim through the scheme.

Video Games Tax Relief (VGTR) The relief rate is worth up to 20% of the core production costs of a game, and applies for video games that are going to be sold to the public, and where the minimum of 25% of the core expenditure on the game is incurred on goods and service provided from within the EEA.

How do I make a Creative Industries Tax Relief Claim?

If your claim requires a cultural test you must wait until your application with the BFI has been approved and you have received your interim/final certification. If you do not get a final certificate from BFI’s Certification Unit then you will need to repay the tax relief that you received prior to the completion of your productions which will not be ideal. You should ensure that the Interim and final certifications are attached when submitting your returns.

It is always optimal to use a specialist within the field of Creative Industries Tax Relief to submit your claim, such as Green Jellyfish, with profound experience in handling specialized tax relief claims. The benefits of using a specialist to submit your claim is that they also have the knowledge to maximize your claim, while still ensuring compliance and that it is made as simple for you as possible. 

  1. Assemble a report which clearly outlines the nature of the project/activity
  2. Calculate qualifying expenditure
  3. Deduct that from the taxable profits (Can be complex, best to use a specialist such as ourselves)

What We Can Do For You

We understand that making a Creative Industry Tax Relief claim can be a very complex process, so we aim to make it as easy as possible for you. Our tax relief specialists are here to help you and your business, whether you are a start-up company or a multinational. We not only aim to get you the largest possible claim, but also to build a relationship to truly understand your business, it’s challenges and ambitions. 

  1. A simple client interview to determine your eligibility, learn about your businesses and the work that you have done. 
  2. We will request supporting documents to get the process underway
  3. We will compile all calculations, liaise with HMRC and handle all queries from them about your claim, to ensure that your application will not be rejected or delayed, and to maximize the amount you are claiming.
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