Overview and general definitions: introduction
Part 15A Corporation Tax Act 2009
Corporation Tax Act 2009 Part 15A
Finance Act 2013 (Now incorporated into CTA 2009 Part 15A) introduced a new relief for the animation industry. Animation Tax Relief is a type of Television Tax Relief (TTR).
The legislation on television production provides specific rules for relief on animations in addition to high-end television productions.
For tax purposes only, the legislation:
- deems that the production of each animation is a separate trade with a start and end date separate to that of the company,
- describes what income and expenditure is eligible for additional tax relief and circumstances where there are exceptions to the normal rules for income and expenditure, and
- restricts the use of losses associated with that trade in certain circumstances.
The new rules apply to all relevant programmes that are developed by a Television Production Company (TPC) (APC10110). Animations are relevant programmes provided that they are not an excluded programme. There are some specific rules related to animations.
If there is no animation TPC then the rules do not apply. This might be because:
- no company meets the required criteria, or
- the company has elected not to be treated as a TPC.
Where any relevant programme is developed by a TPC, it must apply the rules for the separate programme trade whether the programme is eligible for TRR or not. A company may therefore elect to not be treated as a TPC in order to remove the requirement to apply the rules for a separate programme trade.
Television Tax Relief (TTR)
TTR applies to TPCs engaged in the making of:
- a British programme (APC40030),
- that is intended for broadcast (APC40020), and
- at least 25% of core expenditure (APC50010) is incurred on goods or services used or consumed in the United Kingdom (APC50050).From 1 April 2015 this reduces to 10% for programmes which had not completed principal photography by that date.
Those TPCs that are entitled to TTR can claim:
- an additional deduction in computing their taxable profits (APC55010), and
- where that additional deduction creates or increases a loss, to surrender losses for a payable tax credit (APC55100).
Both the additional deduction and the payable credit are calculated on the basis of UK core expenditure up to a maximum of 80% of the total core expenditure by the TPC. Core expenditure is expenditure on pre-production, principal photography and post-production.
TTR is available for expenditure that is used or consumed on or after 1 April 2013.