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HMRC internal manual

Television Production Company Manual

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HM Revenue & Customs
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Calculation: additional deduction: multi-period productions

S1216CG Corporation Tax Act 2009

Where the production of a programme covers more than one period of account, Television Tax Relief (TTR) operates on a cumulative basis. This means that:

  • In the first period of account the level of the Television Production Company’s (TPC’s) enhanceable expenditure is determined by the amount of core expenditure incurred within that period.
  • In subsequent periods of account, including the final period, the level of the enhanceable expenditure is calculated by reference to total expenditure incurred by the TPC to date, taking account of TTR received in earlier periods.

Example: production continues for several periods

A TPC makes a programme with total core expenditure of £1m, of which 75% is incurred on programme production in the UK, and 25% incurred on programme production outside the UK. The programme is produced over three years.

The TPC is eligible for TTR and the rate of enhancement is 100% (TPC55030).

Over the three accounting periods, the profile of core expenditure is:

  UK (£k) Non UK (£k) Total Cumulative (£k)
       
First period 350   350
Second period 350 100 800
Third period 50 150 1,000
Total expenditure 750 250 1,000

First Period

In the first period of account, because all the core expenditure is UK core expenditure, TTR is calculated on the basis of 80% of the total core expenditure, or £240k (= 80% x £350k). The additional deduction is therefore £240k.

Second period

At the end of the second period of account, the total core expenditure to date is £800k, of which £700k is UK core expenditure. Because UK core expenditure is greater than 80% of total core expenditure (80% x £800k = £640k), TTR is provided on the basis of 80% of the total core expenditure incurred to date. The additional deduction is £640k.

However, £240k of TTR has been claimed in the previous accounting period, leaving £400k (= £640k less £240k) to be claimed in the second period.

Third period

At the end of the third period of account, total core expenditure is £1m, of which £750k is UK core expenditure. Because UK core expenditure is less than 80% of the total core expenditure, the TPC is eligible to TTR on the full £750k. The additional deduction is therefore £750k.

Because an additional deduction of £640k has been claimed to date, this leaves £110k (= £750k less £640k) to be claimed in the third accounting period.

Cumulative effect

The cumulative effect at the end of the three periods of account is that TTR is provided on the 75% of core expenditure that was also UK expenditure.

Summary

  Period 1 Period 2 Period 3
       
UK Core Expenditure (cumulative) £350k £700k £750k
Non-UK Core Expenditure (cumulative) £nil £100k £250k
Total Core Expenditure (cumulative) £350k £800k £1m
UK core expenditure as percentage of total 100% 87.5% 75%
Enhanceable expenditure to end of period (lesser of UK core expenditure or 80% of total) £280k    
(80% of total ) £640k
(80% of total) £750k
(UK core)    
  Additional deduction to end of period £280k
  £640k £750k    
  Less additional deduction claimed for earlier period(s) - (£280k) (£640k)
  Additional deduction due for the period £280k £360k £110k