Guidance

Corporation Tax: creative industry tax reliefs

How to qualify and claim for 8 Corporation Tax creative industry tax reliefs.

Overview

Creative industry tax reliefs are a group of 8 Corporation Tax reliefs that allow qualifying companies to claim a larger deduction, or in some circumstances claim a payable tax credit when calculating their taxable profits.

These reliefs work by increasing the amount of allowable expenditure. Where your company makes a loss, you may be able to surrender the loss and convert some or all of it into a payable tax credit.

When your company qualifies

Your company qualifies for, and can claim creative industry tax reliefs if it’s:

  • liable to Corporation Tax
  • directly involved in the production and development of:
    • certain films
    • high-end and children’s television programmes
    • animation programmes
    • video games
    • theatrical productions
    • orchestral concerts
    • museum or gallery exhibitions (the definition of qualifying company is more restrictive - see below)

Companies that claim creative industry tax reliefs are subject to special tax rules.

These rules apply to all:

  • film production companies producing films (whether or not the films are intended for cinema release)
  • television production companies producing relevant animation, children’s or high-end television programmes
  • video games productions
  • theatrical and orchestral production companies which claim relief
  • museums and galleries which claim relief for an exhibition

The cultural test

To qualify for creative industry tax reliefs, all films, television programmes, animations or video games must pass a cultural test or qualify through an internationally agreed co-production treaty - certifying that the production is a British film, British programme or British video game. In all cases, formal certification is required to qualify.

Theatrical productions, orchestral concerts, and exhibitions don’t have to apply for and pass a cultural test.

Certification and qualification is administered by the British Film Institute (BFI) on behalf of the Department for Digital, Culture, Media and Sport (DCMS). The BFI will issue an interim certificate for uncompleted work or a final certificate where production has finished.

If you have any queries concerning certification, email anna.mansi@bfi.org.uk or write to:

Anna Mansi
Head of Certification BFI
21 Stephen Street
London
W1T 1LN

Film Tax Relief (FTR)

Your company can claim FTR on a film if:

Animation Tax Relief (ATR)

Your company can claim ATR on an animation programme if:

Animations commissioned together are treated as one programme.

Your company can’t claim ATR 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

High-end Television Tax Relief (HTR)

Your company can claim HTR on a programme if:

  • the programme passes the cultural test or qualifies as an official co-production
  • the programme is intended for broadcast
  • the programme is a drama, comedy or documentary
  • at least 10% of the total production costs relate to activities in the UK
  • the average qualifying production costs per hour of production length isn’t less than £1 million per hour
  • the slot length in relation to the programme must be greater than 30 minutes

Programmes commissioned together are treated as one programme.

Your company can’t claim HTR 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

Flowchart to help you decide whether your company is a television production company

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Children’s Television Tax Relief (CTR)

CTR is an extension of high-end television and animation relief but is specifically for the producers of children’s television programmes.

Your company can claim CTR on a programme if:

  • the programme passes the cultural test or qualifies as an official co-production
  • the programme is intended for broadcast
  • the programme must be for children, specifically the primary audience is expected to be under the age of 15
  • at least 10% of the total production costs relate to activities in the UK

Quizzes, game shows, and other programmes including an element of competition or contest may qualify if the prize total doesn’t exceed £1,000.

As with ATR, CTR isn’t subject to the £1 million per programme hour threshold or the 30 minute slot length requirement that apply to high-end TV programmes.

Programmes commissioned together are treated as one programme.

Your company can’t claim CTR if the programme:

  • is an advertisement or promotional programme
  • is a news, current affairs or discussion programme
  • is a panel show, variety show, or similar programme
  • broadcasts live events, including theatrical and artistic performance
  • is produced for training purposes

Video Games Tax Relief (VGTR)

VGTR is available from 1 April 2014. Your company can claim VGTR if:

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

If your company qualifies to claim VGTR your company is also entitled to:

  • an additional deduction in computing their taxable profits
  • surrender losses for a payable tax credit where an additional deduction results in a loss

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

Interaction of VGTR and Research and Development tax relief

Some video games development companies may be carrying on research and development and or may have claimed Research and Development (R&D) tax relief in the past.

Where small or medium-sized enterprise R&D tax relief is claimed on a project, that project can’t claim for any other state aid reliefs (including VGTR and grants). This means that if a video games development company chooses to claim VGTR, any research and development area within a project wouldn’t qualify for R&D tax relief under the small and medium-sized enterprise scheme.

For large companies who carry out research and development and claim under the large scheme, the rules are different. This is because R&D tax relief claimed under the large scheme isn’t state aid, and therefore the areas of research and development within a project may be eligible for R&D tax relief.

The Research and Development Expenditure Credit Scheme for large companies is different to the large scheme. Under this scheme the video games development company doesn’t have a choice.

Find more detailed guidance in Corporate Intangibles Research and Development Manual.

Theatre Tax Relief (TTR)

TTR is available from 1 September 2014. Your company can claim TTR if:

  • it’s a theatrical production company
  • it puts on a qualifying theatrical production
  • the primary focus is to play before a live audience of paying members of the general public, or the production is for educational purposes
  • it has a minimum 25% EEA expenditure

There’s no need for a cultural test.

The relief has 2 rates of payable credit: 25% for touring productions, and 20% for others.

Orchestra Tax Relief (OTR)

OTR is available from 1 April 2016. Your company can claim OTR if it’s a qualifying orchestra production company putting on qualifying orchestral concert.

A qualifying orchestral concert is one which:

  • is performed by instrumentalists in an orchestra, ensemble, group or band
  • consists of a minimum of 12 instrumentalists
  • all or the majority of the instruments mustn’t be electronically amplified
  • instrumentalists must be the primary focus of the concert
  • the primary focus is to play before the paying public or for educational purposes
  • has a minimum 25% EEA expenditure

There’s no need for a cultural test.

Detailed guidance for orchestra production companies, including examples of how the relief is calculated, is available in the Orchestra Tax Relief Manual.

Museums and Galleries Exhibition Tax Relief (MGETR)

MGETR is available from 1 April 2017. 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.

There’s no need for a cultural test.

The public don’t need to be charged for admission.

Certain exhibitions are excluded, those:

  • organised in connection with a competition
  • where the sale of displayed objects or works is the purpose, or one of the main purposes
  • which include a live performance by any person, except where this is incidental or an incidental part
  • where anything displayed is for sale
  • where anything displayed is alive

A qualifying company is a charitable company which:

  • maintains a museum or gallery
  • is a company wholly owned by a charity
  • is a local authority which maintains a museum or gallery

The qualifying company must be responsible for production at a venue, be actively involved with decision making, and directly negotiate for, contract for, and pay for rights, goods and services.

There’s a higher rate of payable credit of 25% for touring exhibitions. A touring exhibition must meet these additional requirements:

  • the exhibition must be held at more than one venue
  • at least 25% of the objects or works displayed at the first venue must be displayed at every subsequent venue
  • no more than 6 months should elapse between deinstallation at one venue and installation at the next venue
  • there must be a primary production company for the exhibition, which is within the charge to corporation tax
  • the primary production company must intend from the planning stage that the exhibition will be touring

A primary production company is one which is responsible for the exhibition at a single venue, or at least the first venue if the exhibition is touring, and which makes an effective creative, technical and artistic contribution to the exhibition.

A secondary production company is responsible for a touring exhibition at a subsequent venue, but isn’t the primary production company. There may be more than one secondary production company for an exhibition.

Both primary and secondary production companies are able to claim relief based on their EEA core expenditure, up to 80% of their total core expenditure. At least 25% of core expenditure must be within the EEA in order to qualify for the relief. Core expenditure is that incurred on producing, deinstalling and closing the exhibition at every relevant venue.

Full guidance is available in the Museums and Galleries Exhibition Tax Relief manual.

State aid

The following tax reliefs are state aid:

  • Film Tax Relief
  • Animation Tax Relief
  • High-end Television Tax Relief
  • Video Games Tax Relief
  • Children’s Television Tax Relief
  • Theatre Tax Relief
  • Orchestra Tax Relief
  • Museums and Galleries Exhibition Tax Relief

For all of these reliefs, when your company receives more than €500,000 a year in state aid, details will be published annually on the European Commission website.

If more information is needed HM Revenue and Customs (HMRC) will contact you.

Calculate the relief

When calculating the enhanced deduction or payable tax credit:

  • core expenditure is the total spending on directly incurred costs of making a film, game, programme and so on
  • qualifying expenditure is the spending on goods and services which are used or consumed in the UK for FTR, HTR, CTR and ATR, or the spending on goods and services provided from within the EEA for VGTR, TTR, OTR and MGETR

The rates of both enhancement and any payable tax credit are determined by the level of total core expenditure incurred.

Film Tax Relief

Films are entitled to either:

  • an additional tax deduction (the enhancement) of 100% of enhanceable expenditure (the lesser of UK qualifying expenditure or 80% of total qualifying expenditure)
  • if a loss is surrendered - 25% of the loss up to the amount of enhanceable expenditure

The maximum amount that can be claimed is the lower of the enhanceable expenditure for that accounting period or the amount of the loss.

Animation Tax Relief, High-end Television Tax Relief and Children’s Television Tax Relief

Qualifying companies can claim either:

  • an additional tax deduction (the enhancement) of 100% of enhanceable expenditure (the lesser of UK qualifying expenditure or 80% of total qualifying expenditure)
  • if a loss is surrendered - 25% of the loss up to the amount of enhanceable expenditure

Video Games Tax Relief

After 1 April 2014, qualifying companies can claim an additional deduction in respect of qualifying expenditure on the game. The additional deduction is calculated on the amount of the expenditure that is EEA expenditure, or 80% of the total expenditure.

If the company makes a loss in any accounting period, it may surrender this for a payable video games tax credit. The surrenderable loss is the loss in the period, or if less, the available qualifying expenditure effectively incurred in the same period. This is paid at a rate of 25%.

Detailed guidance on video games, including examples of how the relief is calculated, is available in the Video Games Development Company Manual.

Theatre Tax Relief, Orchestra Tax Relief and Museums and Galleries Exhibition Tax Relief

Relief is given by way of an additional deduction when calculating the taxable profits or losses of the separate theatrical/orchestral/exhibition trade. This will either reduce the taxable profits or create or enhance a loss, a proportion of which can be surrendered for a tax credit.

The additional deduction is the lower of:

  • 80% of the total core expenditure incurred on producing the production or exhibition
  • the EEA core expenditure

How and when to claim

You can claim for relief on your Company Tax Return. If a cultural test is required, you must wait until your company has received its certificate from the BFI. If you have received an interim certificate you must apply for a final certificate after the film, television programme or video game has been completed. If you don’t, you will have to repay any interim relief already paid. Certificates should be sent with the return.

You may make, amend or withdraw a claim to creative industry tax reliefs up to one year after the company’s filing date.

HMRC may agree to accept late claims in some circumstances.

Other reliefs available

The Enterprise Investment Scheme (EIS) provides investors who subscribe for equity in a company conducting qualifying trade generous tax benefits.

The Seed Enterprise Investment Scheme (SEIS) is designed to help small, early-stage companies to raise equity finance by offering a range of tax reliefs to individual investors who subscribe for new shares in those companies.

Further information

A specialist unit within HMRC deals with most claims for creative industry tax reliefs. You can send your questions about claiming the reliefs to the Creative Industry Unit.

If your cases are dealt with by Large Business, contact your HMRC Customer Compliance Manager.

If you’ve any policy queries about the current rules or earlier reliefs for film production, contact Kerry Pope or Stephanie Martinez.

The Foreign Entertainers Unit is a specialist unit within HMRC who agree the UK tax liabilities of individual non UK resident entertainers and sports persons who perform in the UK. The Foreign Entertainers Unit also manages the UK withholding tax system.

The Film, Television and Production Industry guidance notes provide advice with regard to the application of PAYE and National Insurance contributions to non-permanent, casual and freelance workers in the film, television and production industries.

Statistical releases

Please read Creative Industries Statistics for further information.

Published 1 January 2007
Last updated 15 February 2018 + show all updates
  1. This guidance has been updated to include a link to the Museum and Galleries Exhibition Tax Relief manual.
  2. A new section covering Museums and Galleries Exhibition Tax Relief has been added.
  3. Links to Orchestra Tax Relief Manual and Video Games Development Company Manual have been added.
  4. Guidance updated to advise companies if they receive more than €500,000 a year in state aid, certain details will be published on the European Commission website. Information about Orchestra Tax Relief added.
  5. Details of Childrens Television Tax Relief added to the page.
  6. Link to the Theatre Tax Relief manual has been added.
  7. First published.