Official Statistics

Background information and quality report: creative industries tax relief statistics

Updated 24 August 2023

1. Contact

• Organisation unit - Knowledge, Analysis and Intelligence (KAI)
• Name - N. Chowdhury, J. Fox, M. Rowe-Brown
• Function - Statistics Producers, Direct Business Taxes
• Mail address - HM Revenue and Customs (HMRC), Room 3C/03, 100 Parliament Street, London SW1A 2BQ
• Email - ct.statistics@hmrc.gov.uk

2. Policy Background

Film, High-end television, Animation, Video games, Children’s television, Theatre, Orchestra, and Museums and galleries exhibition tax reliefs are part of a range of tax reliefs available to the creative industries. Further information on the policy background and key policy changes can be found on the Creative Industry Tax Reliefs page of GOV.UK.

2.1 Film tax relief

Film tax relief (FTR) aims to promote the sustainable production of culturally British films. It is aimed directly at film production companies for the expenses they incur on the production of a film intended for release in commercial cinemas. For a film to be eligible for relief, it must be certified as British, either by passing the cultural test or through an agreed co-production treaty, and must incur at least 10% of the total core expenditure in the UK.

From 1 April 2014, the rate of relief for larger budget films (those with a qualifying budget of £20 million or over) was increased from 20% to 25% of the first £20 million of qualifying UK expenditure, with any excess qualifying UK expenditure still receiving a 20% tax credit. The minimum UK spend threshold was reduced to 10% from the previous 25%.

From 1 April 2015, a single rate of relief of 25% has applied to all films. Core expenditure is expenditure incurred on pre-production, principal photography and post-production.

2.2 High-end television tax relief

High-end television (HETV) tax relief aims to promote the sustainable production of culturally British television programmes that are defined as ‘High-end’. It is aimed directly at television production companies for the expenses they incur on the production of television programmes. UK qualifying production expenditure is defined as expenditure incurred on filming activities (pre-production, principal photography and post-production) which take place within the UK, irrespective of the nationality of the persons carrying out the activity. It was announced at Budget 2012 and introduced on 1 April 2013. Companies are able to claim HETV tax relief if:

• the programme passes the cultural test - a similar test to that for FTR
• the programme is intended for broadcast - this includes streaming online
• the programme is a drama, comedy or documentary
• at least 10% of the core expenditure takes place in the UK
• the average core expenditure per hour of slot length is not less than £1 million
• the slot length in relation to the programme is greater than 30 minutes

Programmes commissioned together are treated as one programme.

However, companies can’t claim HETV tax relief if the programme:

• is an advertisement or promotional programme
• is a news, current affairs or discussion programme
• is a quiz or game show, panel show variety show, or similar programme
• consists of or includes an element of competition or contest
• broadcasts live events, including theatrical and artistic performance
• is produced for training purposes

Measures announced at Budget 2015 reduced the minimum UK expenditure requirement for television tax relief from 25% to 10% and updated the cultural test in line with the changes previously made to FTR. The reduction in the minimum UK expenditure requirement also applies to animation tax relief.

2.3 Animation tax relief

Animation tax relief (ATR) aims to promote the sustainable production of culturally relevant animation productions in the UK. It is aimed directly at companies producing animation programmes and was introduced on 1 April 2013. Companies are able to claim ATR on an animation programme if:

• the programme passes the cultural test - a similar test to that for FTR
• the programme is intended for broadcast - this includes streaming online
• at least 51% of the total core expenditure is on animation
• at least 10% of the core expenditure is UK expenditure

Animations commissioned together are treated as one programme. The same exclusions apply as for HETV tax relief, for example, if a programme is an advertisement or promotional programme, then a company cannot claim ATR.

2.4 Video games tax relief

Video games tax relief (VGTR) aims to promote the sustainable production of culturally relevant video games in the UK. It is aimed directly at companies producing video games and was available from 1 April 2014. Companies are able to claim VGTR if:

• the video game is British
• the video game is intended for supply to the general public
• at least 25% of the core expenditure is incurred on goods or services that are provided from the UK or European Economic Area (EEA)

If the company qualifies, it is also entitled to an additional deduction in computing their taxable profits and, where that additional deduction results in a loss, to surrender losses for a payable tax credit.

Both the additional deduction and the payable credit are calculated on the basis of European core expenditure up to a maximum of 80% of the total core expenditure by the video games company. Core expenditure is expenditure on designing, producing and testing the video game.

2.5 Children’s television tax relief

Children’s television tax relief (CTR) aims to encourage the production of culturally British children’s television programmes in the UK. CTR aims for the producers of children’s television programmes. CTR is not subject to the £1 million per programme hour threshold or the 30-minute slot length that applies to HETV programmes. This measure was announced at Autumn Statement 2014 and took effect on qualifying expenditure incurred on and after 1 April 2015. A production company can claim CTR relief if:

• it qualifies as British by either passing the Children’s Television Cultural Test or qualifies as an official co-production (with treaty partners that allow for television)
• at least 10% of the core expenditure is UK expenditure
• the primary target audience of the programme is children under the age of 15
• the programme is intended for broadcast - this includes streaming online

2.6 Theatre tax relief

Theatre tax relief (TTR) was announced in the Finance Act of 2014 and was introduced on 1 September 2014. Theatrical productions do not need to pass a Theatrical Cultural Test. Production companies are eligible to claim TTR if:

• it is a qualifying production company engaged in the making of theatrical productions
• the production is intended to play before a live audience of paying members of the general public, or is provided for educational purposes
• it has a minimum of 25% European expenditure

TTR has two rates of payable credit, 25% for touring productions, and 20% for others.

Theatres were severely affected by Covid restrictions, resulting in falling revenues and reduced expenditure on new productions. To support theatres as they recover from the impact of Covid, the government announced a temporary increase in the rates of TTR for productions which commenced production on or after 27 October 2021. The higher rates were extended for a further two years in the 2023 Spring Budget. The policy changes can be found on the GOV.UK website.

2.7 Orchestra tax relief

Orchestra tax relief (OTR) was announced at Autumn Statement 2014 and was introduced on 1 April 2016. Orchestral productions do not need to pass an Orchestral Cultural Test. Where a company is an Orchestral Production Company, each qualifying concert or series of concerts is treated as a separate orchestral trade if OTR is claimed in respect of that concert or series. A concert is qualifying if:

• the concert is an orchestral concert
• the concert is intended to be performed live to paying members of the general public or provided for educational purposes
• the instrumentalists number at least 12
• none, or a minority of, the musical instruments is electronically or directly amplified
• at least 25% of the core expenditure on the concert is European expenditure

There is one rate of payable credit of 25% for both touring and non-touring productions.

To support orchestras as they recover from the impact of Covid, the government announced a temporary increase in the rates of OTR for concerts which commenced production on or after 27 October 2021. The higher rates were extended for a further two years in the 2023 Spring Budget.

2.8 Museums and galleries exhibition tax relief

Museums and galleries exhibition tax relief (MGETR) was announced in Budget 2016 and introduced on 1 April 2017. Exhibitions do not need to pass a cultural test. It is available to qualifying companies that put on a qualifying exhibition: a curated public display of an organised collection of objects or works which are considered to be of scientific, historic, artistic or cultural interest. A single object can also constitute an exhibition. A company qualifies if:

• it is the primary or secondary production company for the exhibition
• it is a charitable company which maintains a museum or gallery, or is a company wholly owned by a charity that maintains a museum or gallery, or is a company wholly owned by a local authority that maintains a museum or gallery
• it intends from the planning stage that the exhibition should be public
• at least 25% of the core expenditure of the exhibition is European expenditure

MGETR has two rates of payable credit, 25% for touring exhibitions, and 20% for others.

To support museums and galleries as they recover from the impact of Covid, the government announced a temporary increase in the rates of MGETR for exhibitions which commenced production on or after 27 October 2021. The higher rates were extended for a further two years in the 2023 Spring Budget.

3. Statistical presentation

3.1 Data description

This is an Official Statistics publication produced by HM Revenue and Customs (HMRC). It provides information on the number of productions made in the UK claiming tax relief. Statistics are also presented on the number of tax relief claims, the amount paid in total and split by claim size.

Statistics are produced annually with this set based on data available in May 2023.

All figures for the latest two years are considered provisional and are subject to revision in next year’s publication. An uplift factor has been applied to the latest year’s figures in the tables to account for claims not yet received by HMRC.

3.2 Classification system

This publication provides breakdowns of the tax relief claims available to the creative industries by relief type, which are film, high-end television, animation, video games, children’s television, theatre, orchestra and museums and galleries exhibition.

3.3 Sector coverage

Creative industry tax reliefs are available for qualifying companies liable to Corporation Tax that are directly involved in the production and development of 8 creative areas.

3.4 Statistical concepts and definitions

Financial year

The statistics are aggregated into financial years. A financial year stretches from 1 April until 31 March the following calendar year.

Accruals basis

The number of claims paid on an accruals basis allocates the claims to the year the accounting period ended. There is a lag in the data as companies have a year after the end of their accounting period to file their Corporation Tax return, and a further year to make, withdraw or amend a claim.

3.5 Statistical unit

The unit in the statistics is creative industry tax relief claims made by qualifying companies.

3.6 Statistical population

The statistical population includes all companies who have submitted a company tax return (CT600) claiming a creative industry tax relief.

3.7 Reference area

The geographic region covered by the data is the United Kingdom (UK).

3.8 Time coverage

The statistics cover the time periods from financial year ending:

• 2007 to 2022 for Film tax relief
• 2014 to 2022 for High-end television tax relief
• 2014 to 2022 for Animation tax relief
• 2015 to 2022 for Video games tax relief
• 2016 to 2022 for Children’s television tax relief
• 2015 to 2022 for Theatre tax relief
• 2017 to 2022 for Orchestra tax relief
• 2017 to 2022 for Museums and galleries exhibition tax relief

4. Statistical processing

4.1 Source data

The statistics presented in this release are based on data from the Management Information System (MIS) compiled by the specialist creative industries unit in HMRC, and certification data supplied on behalf of the Department for Digital, Culture, Media and Sport (DCMS) by the British Film Institute (BFI).

The HMRC MIS data provides information on the number of claims and the amount of relief paid for each of the creative industry tax reliefs.

As the tax reliefs allow claims to be made during production, subject to the production securing at least an interim certificate, this means that productions may make two or more claims for tax relief, comprising one or more interim claims during production then a final claim once the production is completed.

4.2 Frequency of data collection

The data for creative industry tax reliefs are collected annually. This year’s statistics are based on data extracted on 31 May 2023.

4.3 Data collection

The HMRC creative industries unit receives tax relief claims submitted by companies on their company tax returns, with supporting information including which relief is being claimed, the production(s) for which it is being claimed and the BFI certificate(s) where applicable. The HMRC unit records each claim in their management information (MIS) and updates the MIS as the claim is processed.

The BFI receives applications for certification of films, TV programmes and video games, and records these in their database, updating the database as the applications are processed.

4.4 Data validation

Initial checks carried out on the data include:

• the reconciliation of MIS and BFI records to identify duplicates, missing cases and inconsistency between records
• plausibility checking that the amounts of tax relief paid have realistic values. Any record with a very high or low amount or higher than the amount claimed is referred back to the data supplier, which will check on these cases
• checking for inconsistencies, for examples, where an end date of production is earlier than the start date or where a payment date is earlier than an accounting period end date

4.5 Data compilation

The data from HMRC and BFI are linked using the file-number which is assigned by the BFI to each film, programme or video game when it applies for certification. This file-number is included on the certificate issued by BFI, which the company then submits to HMRC with their tax relief claim.

Throughout this release, numbers are rounded to the nearest 5 and amounts paid to the nearest £1 million. Statistics are consistent with HMRC’s policies on dominance and disclosure.

5. Quality Management

5.1 Quality assurance

All official statistics produced by KAI, must meet the standards in the Code of Practice for Statistics produced by the UK Statistics Authority and all analysts adhere to best practice as set out in the ‘Quality’ pillar.

Analytical Quality Assurance describes the arrangements and procedures put in place to ensure analytical outputs are error free and fit-for-purpose. It is an essential part of KAI’s way of working as the complexity of our work and the speed at which we are asked to provide advice means there is a high risk of error which can have serious consequences on KAI’s and HMRC’s reputation, decisions, and in turn on peoples’ lives.

Every piece of analysis is unique, and as a result there is no single quality assurance (QA) checklist that contains all the QA tasks needed for every project. Nonetheless, analysts in KAI use a checklist which summarises the key QA tasks, and is used as a starting point for teams when they are considering what QA actions to undertake.

Teams amend and adapt it as they see fit, to take account of the level of risk associated with their analysis, and the different QA tasks that are relevant to the work.

At the start of a project, during the planning stage, analysts and managers make a risk-based decision on what level of QA is required.

Analysts and managers construct a plan for all the QA tasks that will need to be completed, along with documentation on how each of those tasks are to be carried out, and turn this list into a QA checklist specific to the project.

Analysts carry out the QA tasks, update the checklist, and pass onto the Senior Responsible Officer for review and eventual sign off.

5.2 Quality assessment

The QA for this project adhered to the framework described in ‘4.1 Quality assurance’ and the specific procedures undertaken were as follows:

Stage 1 – Specifying the question

Up to date documentation was agreed with stakeholders setting out outputs needed and by when; how the outputs will be used; and all the parameters required for the analysis.

Stage 2 – Developing the methodology

Methodology was agreed and developed in collaboration with stakeholders and others with relevant expertise, ensuring it was fit for purpose and would deliver the required outputs.

Stage 3 – Building and populating a model/piece of code

Stage 3 consists of the following steps:

• analysis was produced using the most appropriate software and in line with good practice guidance
• data inputs were checked to ensure they were fit-for-purpose by reviewing available documentation and, where possible, through direct contact with data suppliers
• QA of the input data was carried out
• the analysis was audited by someone other than the lead analyst – checking code and methodology

Stage 4 – Running and testing the model/code

Stage 4 consists of the following:

• results were compared with those produced in previous years and differences understood and determined to be genuine
• results were determined to be explainable and in line with expectations

Stage 5 – Drafting the final output

The final stage includes the following:

• checks were completed to ensure internal consistency (e.g., totals equal the sum of the components)
• the final outputs were independently proofread and checked

6. Relevance

6.1 User needs

This analysis is likely to be of interest to users under the following broad headings:

• policy makers in government
• academia and research bodies
• media
• film, television, theatre and orchestra production companies
• museum and gallery exhibitors
• companies raising funds to support film, television, theatre, orchestra and video games production

6.2 User satisfaction

HMRC is committed to providing impartial quality statistics which meet our users’ needs. We encourage our users to engage with us so that we can improve our National and Official Statistics and identify gaps in the statistics that we produce.

If you would like to comment on these statistics or have any enquiries, please use the statistical contacts named at the beginning of the report.

6.3 Completeness

The statistics include all claims for creative industries tax credits paid out by HMRC in the time periods specified.

7. Accuracy and reliability

7.1 Overall accuracy

This analysis is based on administrative data, and accuracy is addressed by eliminating non-sampling errors as much as possible through adherence to the quality assurance framework.

Data from BFI and HMRC is reconciled to confirm the details of each record. Data capture errors can occur and this process allows us to mitigate this risk by confirming the correct values for any mismatching records (for example, where a film may have changed title during production, it may initially appear that they are two separate records). Outlier figures (for example, where a claim figure looks abnormally high or low) is checked individually against its source and against other sources for confirmation or correction.

7.2 Sampling error

The tables include every case captured by HMRC and, as no sampling is necessary, sampling error is not an issue.

7.3 Data revision

Data revision – policy

HMRC MIS figures on the number of claims and amounts of relief paid are subject to revision, particularly for the most recent two years as some late claims will still be received and registered by HMRC. Figures in this release are marked as provisional or revised where applicable.

Data revision – practice

This year we’ve revised data from the year ending March 2019 in the accruals tables.

7.4 Seasonal adjustment

Seasonal adjustment is not applicable for this analysis.

8. Timeliness and punctuality

8.1 Timeliness

These statistics are published in August 2023. They cover claims paid out by HMRC to qualifying companies relating to accounting periods falling in the financial year ending up to March 2022.

8.2 Punctuality

In accordance with the Code of Practice for official statistics, the exact date of publication will be given not less than one calendar month before publication on both the Schedule of updates for HMRC’s statistics and the Research and statistics calendar of GOV.UK. Any delays to the publication date will be announced on the HMRC National Statistics website.

The full publication calendar can be found on both the Schedule of updates for HMRC’s statistics and the Research and statistics calendar of GOV.UK.

8.3 Coherence and comparability

8.4 Geographical comparability

This analysis is presented for a single region – the United Kingdom.

8.5 Comparability over time

The statistics for each relief are comparable with previous years. The increase in the total amount of creative reliefs paid out over the last 10 years is partly due to the introduction of new creative industry tax reliefs. However, note that due to changes made in the August 2023 publication, the statistics are now only presented on an accruals basis. Figures in tables 1.1 to 8.1, published in August 2023 onwards, should be compared to the accruals tables 1.2 to 8.2 in previous publications up to and including August 2022. Figures in tables 1.2 to 8.2 in the August 2023 publication and thereafter are not comparable with tables published in August 2022 or before.

Coherence – sub-annual and annual statistics

All statistics are presented as annual outputs. No coherence issues exist.

8.6 Coherence – internal

Rounding of numbers may cause some minor internal coherence issues as the figures within a table may not sum to the total displayed. Effort has been made to ensure totals between tables remain consistent where appropriate.

9. Accessibility and clarity

9.1 News release

There haven’t been any press releases linked to this data over the past year.

9.2 Publication

The tables and associated commentary are published on the Creative industries annual tax relief statistics webpage of GOV.UK.

Tables are published in the OpenDocument format, and the associated commentary in HTML.

Both documents comply with the accessibility regulations set out in the Public Sector Bodies (Websites and Mobile Applications) (No. 2) Accessibility Regulations 2018.

Further information can be found in HMRC’s accessible documents policy.

9.3 Online databases

This analysis is not used in any online databases.

9.4 Micro-data access

Access to this data is not possible in micro-data form, due to HMRC’s responsibilities around maintaining confidentiality of taxpayer information.

9.5 Other

There aren’t any other dissemination formats available for this analysis.

9.6 Documentation on methodology

All up-to-date information on the methodology is found on this webpage.

9.7 Quality documentation

All official statistics produced by KAI, must meet the standards in the Code of Practice for Statistics produced by the UK Statistics Authority and all analysts adhere to best practice as set out in the ‘Quality’ pillar.

Information about quality procedures for this analysis can be found in section 4 of this document.

10. Cost and burden

HMRC MIS data is obtained from an administrative data source, and so there is no additional burden on companies or HMRC tax inspectors to provide information.

It is estimated to take about 90 days FTE to produce the annual analysis and publication.

11. Confidentiality

11.1 Confidentiality – policy

HMRC has a legal duty to maintain the confidentiality of taxpayer information.

Section 18(1) of the Commissioners for Revenue and Customs Act 2005 (CRCA) sets out our duty of confidentiality.

This analysis complies with this requirement.

11.2 Confidentiality – data treatment

The statistics in these tables are presented at an aggregate level so identification of individual companies is minimised, but potentially still possible.

Where potential risks exist, statistical disclosure control (SDC) is applied to cells within tables. SDC is the application of methods to ensure confidential data is not disclosed to parties who don’t have authority to access it.

SDC modifies data so that the risk of data subjects being identified is within acceptable limits while making the data as useful as possible.

Disclosure in this analysis is avoided by applying rules that prevent categories of data containing:

• small numbers of contributors
• small numbers of contributors which are very dominant.

If a cell within a table is determined to be disclosive, its contents are suppressed either by removing the data or combining categories.

Further information on anonymisation and data confidentiality best practice can be found on the Government Statistical Service’s website.