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HMRC internal manual

Animation Production Company Manual

Eligible expenditure: attributing costs across the stages of animation

The rules for Television Tax Relief (TTR) include the rules for animation tax relief. The stages of production are those that are typical for a generic television production. However some animations do not always take place in a strict sequential manner. Many items of expenditure will be attributable in varying degrees to several stages.

For example:

  • the screenplay will normally be written during development and is required throughout the production process. It may be reworked throughout this process, but it will be required from development through to post-production;
  • a production designer might be engaged as part of development, pre-production or principal photography;
  • an actor will typically record dialogue before principal photography or rendering, but it may be done in post-production also. They will be required for rehearsals during pre-production.

It would be reasonable to consider that all these examples contribute to more than one stage of programme production.

It is firstly important to identify which stages of production a given item of expenditure contributes to. It is then necessary to determine how much of that expenditure is attributable to each stage.

This two-step process is most important when determining what is development and what is a later stage of production. Development is not core expenditure so does not qualify for TTR whereas pre-production does qualify.

It is therefore most important to identify costs that are development and then quantify them.

How costs are attributed between stages of production must be done on a fair and reasonable basis (APC50110)