CFM95750 - Interest restriction: tax-EBITDA: Television Tax Relief

TIOPA10/S407(3)(f)

Companies which are directly involved in the production and development of a television programme may be able to claim deductions or tax credits for Television Tax Relief under CTA09/S1216CF or S1216CH if they meet certain conditions. These deductions and credits are excluded from the calculation of adjusted corporation tax earnings when determining a company’s tax-EBITDA.

Animation Tax Relief

  • Animation Tax Relief is a type of Television Tax Relief providing specific rules for relief on animations. Further guidance on Animation Tax Relief can be found at APC10000 onwards.

Children’s Television Tax Relief

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

Amount of Tax Relief Available

Qualifying Companies eligible for Television Tax Relief or one of the extension reliefs can claim:

  • an additional tax deduction of 100% of qualifying expenditure incurred on the production, running and closing the production;
  • or, if the company makes a loss, a repayable tax credit of 25% of the loss up to the amount of qualifying expenditure.

Effect for tax-EBITDA purposes

Television Tax Relief is one of the qualifying tax reliefs specified as an excluded amount in TIOPA10/S407(3).

Any additional deductions received over and above the actual amount of qualifying expenditure incurred would have a distorting effect of reducing the earned profit of the company for tax-EBITDA purposes, decreasing the group’s interest capacity.

Conversely, the receipt of a tax credit of 25% of a surrendered loss would have the effect of increasing a group’s interest allowance if included as an income item for tax-EBITDA purposes. This would serve to increase the benefit received for companies claiming Television Tax Relief beyond the intention of the original relief.

Consequently, additional deductions and tax credits received under s1216CF and s1216CH respectively, should not be brought into account when calculating taxable total profits of the period to determine a company’s tax-EBITDA.