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    From Shakespeare to Lara Croft & Line of Duty Creative Sector Tax Reliefs

    Did you know the creative industries contributed £115.9 billion to the UK economy according to government figures? Employing around 2 million people. It’s a growing sector.

    Things have moved on a bit. All the world may be a stage and we may all still be just players to paraphrase Shakespeare. But we’re now also talking film production, video gaming, musicals and stage productions through to the work of museums and galleries. The creative sector encompasses a wide range of activities and businesses who contribute to the end product for an audience to enjoy.

    So valuable are the creative industries to the economy there are a number of tax reliefs available to support UK based activities in the sector. We can help qualifying businesses access those tax reliefs.

    The reliefs are there to encourage growth in creative and high technology areas such as video gaming and animation as well as film, theatre and the arts.

    The British Film Institute calculates recent spend/turnover relating to video game development in the UK alone was £2.77bn. With the Video Games Tax Relief supporting over 15,000 jobs connected to video gaming. Spend in the UK supported by the Video Games Tax Relief was £860.4m over a two-year period and continues to rise.

    It’s universally known that the UK has a pool of world class talent across the creative sector. These tax reliefs support the sector these sectors, and as such the regime has been introduced to both retain and foster productions and skills in the UK, whilst improving the industry’s competitiveness when compared to Europe and the wider world.

    WHO CAN APPLY?

    The reliefs operate to provide additional tax relief in key sectors as listed below:

    • Film Production
    • Television Production
    • Video Games Production
    • Theatrical Production
    • Orchestral Production
    • Museum & Galleries.

    Relief is provided in relation to production expenditure provided certain rules are met. It provides an additional deduction from taxable profits of up to 80% qualifying expenditure and is made through the company’s tax return. The additional relief can reduce the company’s tax liability or, if tax losses are generated, result in a payable tax credit of up to 25% value of the loss.

    It is worth noting that the tax credit rates have temporarily increased for theatres, orchestras, museums & galleries in recognition of the impact of Covid-19 on these sectors. The tax credit rates increased to up to 50% for companies in these sectors from 27 October 2021, returning to normal levels from April 2024.

    Certain conditions must be met before a company can claim for these additional reliefs. These conditions vary between sectors and include cultural stipulations for claims in the film, television and video games industries (generally designed to concentrate the activities and expenditure to the UK).

    An additional point to note, is that creative sector claims can restrict the ability to claim for R&D relief.  As such, planning would be required if both reliefs could potentially apply to your expenditure.

    For more information on how the reliefs could benefit your business get in touch and we’ll talk you through whether making a claim is right for your company.

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    REBECCA PRINCE, CP Innovation Senior Manager

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