This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Animation Production Company Manual

Calculation: surrenderable losses and Television Tax Credit - examples - single-period productions

The following examples illustrate how Television Production Companies (TPCs) that sustain a surrenderable loss can surrender that loss in return for a payable tax credit (APC55100). In each case the production is completed within a single period.

Example 1

A TPC makes an animation with total core expenditure of £1m, all of which is UK expenditure. The animation was commissioned by a broadcaster which pays £900k for it.

  Income   £900k
  Expenditure   £1m
  Pre-TTR profit (loss)   (£100k)
  Enhanceable expenditure £800k  
  (UK core expenditure of £1m x 80%)    
  Additional deduction   (£800k)
  Post-TTR profit (loss)   (£900k)

The surrenderable loss is the lesser of:

  • the trading loss: £900k and
  • the enhanceable expenditure on which the additional deduction for period: £800k.

In this case, the TPC can surrender up to £800k.

The amount of credit due is:

the payable credit rate: 25% 

multiplied by

the loss surrendered: £800k 

giving a payable credit of £200k. This is equal to 20% of the total core expenditure. The TPC is not obliged to surrender the entire loss, but it will most likely do so.