The UK’s economy depends on innovation, which is why some businesses can claim tax relief if they work in the creative sector. The idea behind these tax incentives is to encourage new projects and cutting-edge technologies.

What tax relief is available for creative businesses?

There are currently eight different types of corporation tax relief available for creative industry businesses, and each one has different criteria. Knowing which creative tax reliefs are available and how to apply isn’t always easy, so we’ve put together this quick guide to help.

You might already have spotted that we only refer to corporation tax relief. Sadly, that does mean these reliefs are only available to companies who pay corporation tax, and not to sole traders or general partnerships.

Of course, if you think your business may be eligible but you’re not quite sure or you’ve got any questions, feel free to get in touch.
 

What is the BFI cultural test?

We’ll start here, because the BFI cultural test is central to most of the tax relief schemes available to creative businesses.

Essentially a business must prove the game, programme, or show that it creates has scored enough points to be certified as British. The British Film Institute (BFI) handles the certification process on behalf of the UK government.

When do I apply for a Cultural Test certificate?

You can request an interim certificate before completing the work. This can be particularly useful if you’re working on a longer project spanning financial years, and need to submit your Company Tax Return.

Once your production, film, programme, or video game is complete you will need to apply for a final certificate from BFI’s Certification Unit. This is key, and failing to do so means you’ll need to repay any tax relief you have already claimed. Make sure you include your final certificate – plus any interim ones – as proof of eligibility when you submit your Company Tax Return.

What Creative Sector Tax Reliefs are on offer?

There are different types of tax relief schemes available to creative sector businesses, which are provided according to the type of work you produce.

Animation Tax Relief (ATR)

 
Multiple animations that are commissioned together will be treated as a single programme, but the good news is that there’s no upper limit on how much you can claim.

Video Games Tax Relief (VGTR)

Video Games Tax Relief is a particularly popular type of relief claimed by gaming companies up and down the UK. To be eligible, your company must have:

• Developed a video game that meets the Cultural Test criteria as being British
• Created a game that is specifically for public sale
• At least 25% of core expenditure (i.e., pre-development, principal photography, and post-development) was incurred on goods or services that come from the European Economic Area (again, all EU countries as well as Liechtenstein, Norway, and Iceland).

Unfortunately, if your company has already claimed Research and Development Tax Relief on a project, you can’t go on to claim VGTR, grants, or any other state aid reliefs on that same project. That said, you may be able to claim other state aid on future projects.

You also won’t be able to claim Video Games Tax Relief if your game has been designed for marketing, promotional or gambling purposes.

Film Tax Relief (FTR)

Film Tax Relief is another popular one, with companies able to claim the tax relief if their project:

• Has passed the British Film Institute’s cultural test and is therefore considered ‘British’
• Incurred at least 10% of the total production costs on UK activities
• Is intended for theatrical release

Find out more about FTR, including eligibility and how to claim, on the Gov.uk website.

High-End Television Tax Relief (HTR)

High-End Television Tax Relief is less well-known but it can make a huge difference – particularly to small production companies.
 

 
If two or more programmes were commissioned together, they’ll be regarded as one program and be treated accordingly for tax relief purposes.

Children’s Television Tax Relief (CTR)

 
Game shows, quizzes and other programmes that involve contest or competition are able to claim, but only if the prize money is less than £1,000. Again, if multiple programmes are commissioned together, they’ll be treated as one programme. Learn more about Children’s Television Tax Relief.

Theatre Tax Relief (TTR)

Theatrical production companies will be able to apply for TTR if:

• The production is “a play, opera, musical, or other dramatic piece” where the singers, actors, dancers, or other performers perform live roles
• At least 25% of the core expenditure your company incurred was spent on goods or services that were provided from within the EEA (plus Lichtenstein, Norway, and Iceland).

See the government’s Theatre Tax Relief Manual for more information and how to apply.

Orchestra Tax Relief

If you haven’t even heard of Orchestra Tax Relief, you’re not alone – many people haven’t. This government initiative works by allowing instrumental groups to receive a payment from HMRC that equals a percentage of their production costs. Despite the name, any type of instrumental group can claim – not just orchestras.

For more information about eligibility and how to make a claim, see the Claiming Orchestra Tax Relief for Corporation Tax page on the Gov.uk website.

Museums and Galleries Exhibition Tax Relief (MGETR)

Any eligible company which curates a public display, show, or exhibition of an organised collection of objects or works that have cultural, historic, scientific, or artistic interest can claim MGETR. It doesn’t even have to be many items – it could just be one.

Unlike many of the other Creative Sector Tax Reliefs, galleries and museums aren’t subject to the cultural test to be eligible.

A quick word about State Aid

Creative industry tax reliefs are classed as state aids. This means that if your company receives €500,000 or more in state aid per year, the European Commission publish the details on their website, regardless of what creative industries tax relief you’re claiming.

Learn more about our online accounting services to get help with claiming tax relief. Call us on 020 3355 4047 for a chat, and get an instant online quote.