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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)

Your production might be eligible if… You won’t qualify if the production…
  • It passes the cultural test. This is a similar test to the one for Film Tax Relief but within the European Economic Area (so all EU countries plus Liechtenstein, Iceland and Norway)
  • The intention is to broadcast it to the public
  • You spend 51% or more of the total core expenditure on animation
  • 10% or more of the total production costs are in relation to UK-based activities.
  • Is a current affairs, news, or topical debate programme
  • Includes any aspect of contest or competition
  • Is for promotional or advertising purposes
  • Is a game show, quiz show, variety show, panel show, or similar
  • Broadcasts live events, including artistic and theatrical performances
  • Is an aid for training

 
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:

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:

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.
 

Apply for High-End Television Tax Relief if your production… You won’t qualify for HTR if the programme…
  • It is declared ‘British’, again by passing the high-end television cultural test
  • Is a drama, documentary, or comedy
  • Was produced to be broadcast to the public
  • Is at least 10% of the total production costs relate to UK-based activities
  • Is at least 30 minutes
  • The average eligible production cost per hour of production length is at least £1 million per hour.
  • Is a current affairs, news, or topical debate programme
  • Consists of, or includes, an element of competition or contest
  • Is an advertisement or promotional programme
  • Is a quiz or game show, panel show, variety show, or similar programme
  • Broadcasts live events, including artistic and theatrical performances.
  • Is for training purposes

 
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)

A production is eligible if… A programme isn’t eligible if it…
  • It passes the cultural test, as we’ve mentioned above
  • You intend the programme to be broadcast
  • 10% or more of the total production costs are in relation to UK-based activities
  • It’s aimed at children under the age of 15
  • Is an advertisement or promotional programme
  • Is a news, current affairs, or discussion programme
  • Broadcasts live events, including theatrical or artistic performances
  • Is a variety show, panel show, or similar
  • Is for training purposes.

 
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:

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

 

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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.

About The Author

Dean Salmon

I'm an AAT and ACA qualified Chartered Accountant with over 13 years experience working with businesses, contractors and sole traders. I also love watching live music, and quizzes! Learn more about Dean.

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