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HMRC internal manual

Business Income Manual

Broadcasters: unincorporated broadcasters: tax treatment of broadcasting licence fees

The guidance below does not apply to companies acquiring or selling licences after 31 March 2002 as such expenditure is covered by the intangible assets regime for companies. See the Corporate Intangibles Research and Development (CIRD) manual.

For an overview of the UK broadcasting licences issued by the Office of Communication (Ofcom), see BIM51455. The guidance below considers the tax treatment for an unincorporated broadcaster of the fees incurred in obtaining a broadcasting licence in the second category of licences described in BIM51455.

Types of fees payable vary depending on licence

In relation to the second category of licences, there is commonality between the fee structure for Television Licensable Content Service (TLCS), Digital TV Programme Service (DTPS) and Digital Television Additional Service (DTAS). The fee structure can be summarised as follows:

  • an application fee,
  • an annual fee for the duration of the licence (the amount of the fee is a percentage of turnover with the percentage determined by the category of broadcaster),
  • a fee for transferring the licence if the licensee changes.

The fee structure of Radio Licensable Content Service (RLCS) is as follows:

  • an application fee,
  • an annual flat fee for the duration of the licence,
  • a fee for transferring the licence if the licensee changes.

The fee structure of Radio Restricted Service Licence (RSL) depends on the type of licence.

Type of RSL Fees
Short-term RSLs (S-RSLs) (1) application fee

(2) two fees which are calculated on a daily basis and vary depending on waveband and power level

If the licence needs to be amended or the broadcast postponed there will be further fees.    
  Long-term RSLs (L-RSLs) (1) application fee

(2) two annual fees which vary depending on whether the service is on freely-radiating AM, FM or induction loop

If the licence needs to be amended there will be a further fee.    
  Audio Distribution Systems RSLs (ADS-RSLs) (1) application fee
(2) an annual fee

Community Radio station must pay two annual fees, one of which is comprised of:

  • a flat fee, plus
  • a percentage of any commercial revenue of the radio station.

The other annual fee is a flat fee.

Tax treatment of the annual fees

Although the licence to broadcast is a fixed capital asset in the broadcaster’s hands, the authorities show that the right to use a capital asset may be secured either for a capital sum, paid in one `lump’ or by instalments, or, if there is no identifiable capital sum, by a series of revenue payments. For example, a lease of land will either involve the payment of a premium (capital) or rents (revenue) or both. Therefore, you should consider the payment of the periodical licence fees as akin to the payment of rent under a lease. Therefore the payments can be deducted as revenue expenses from the trading profits of the unincorporated broadcaster. Since the payments are rentals of a revenue nature, these amounts are not payments under the loan relationships regime in the hands of the recipient.

Incidental costs of broadcasting licence applications

For the tax treatment of application fees, amendment fees, transfer fees and other incidental costs associated with broadcasting licences, see BIM51465.