On 20 July 2016 the UK published updated statistics on claims for creative industry tax relief. The statistics include data for the film tax relief, high end television tax relief, animation tax relief and video games tax relief for periods up to 2015/16. In the case of video games tax relief this is the first time that statistics have been published.
The statistics are compiled by HMRC’s specialist films unit and from certification data supplied for the Department for Culture, Media and Sport by the British Film Institute. It should be noted that as claims can be made during production, on the basis that the production has secured at least an interim certificate, a production may make two or more claims for tax relief, including one or more interim claims and a final claim on completion of the work.
Film tax relief
This relief amounts to 25% of qualifying production expenditure and is available in the case of British qualifying films that have either passed a cultural test or are qualifying co-productions. The films are required to have a minimum UK core spend of 10% and the tax relief is based on the lower of 80% of the core expenditure or on the actual UK core expenditure. There is also a provision for loss-making companies to surrender the tax relief for a payable tax credit. This relief was introduced in its current form in 2007.
The provisional statistics for 2015/16 show that 210 films made in the UK claimed film tax relief with UK expenditure of more than GBP 1.0 billion. GBP 340 million was paid in response to 530 claims. Since the relief was introduced in January 2007 2,430 claims for film tax relief have been made. More than GBP 1.8 billion has been paid in film tax relief of which GBP 1.3 billion related to large budget films and GBP 540 million to limited budget films.
High end television tax relief
The high-end television (HETV) tax relief was first introduced on 1 April 2013 making available a tax deduction for qualifying companies. A claim for the relief can be made if the program passes a cultural test; is intended for broadcast; and is a drama, comedy or documentary. At least 10% of the production costs (25% before April 2015) must be related to activities in the UK; the average qualifying production costs per hour of production must be at least GBP 1 million per hour; and the slot length of the program must be more than thirty minutes. The television company responsible for the program must be within the UK corporation tax net. This relief also has a provision for loss making companies to surrender the relief for a payable tax credit.
The tax relief cannot be claimed for a program if it is an advertisement; news, current affairs or discussion program; quiz, panel or game show; competition or contest; live event broadcast (including theater) or training production.
In 2015/16 50 television programs made in the UK were the subject of claims for HETV tax relief with UK expenditure on the programs amounting to GBP 300 million. In 2015/16 GBP 96 million was paid out in response to 115 claims. The statistics show that GBP 203 million has been paid out in tax relief since this measure was introduced.
Animation tax relief
This relief was also introduced on 1 April 2013 and supports the production of culturally relevant animations in the UK. The measure allows for a tax deduction or a repayable tax credit for qualifying companies. A company qualifies for the relief if the animation passes the cultural test; is intended for broadcast; at least 51% of the core expenditure is on animation; and at least 10% of the production costs (25% before April 2015) relate to activities in the UK. Certain types of animations including advertisements or training productions are excluded from tax relief.
In 2015/16 there were 20 animations with a financial year of completion of 2015/16 and these had UK expenditure of GBP 38 million. The statistics show that 65 claims have been made for animation tax relief since the measure was introduced with UK expenditure of GBP 110 million. A total of almost GBP 19 million has been paid in response to claims for animation tax relief since the measure was introduced.
Video Games Tax Relief
Statistics on the video games tax relief have been released for the first time since the legislation was introduced. Under this measure a 25% tax relief is granted on a maximum of 80% of the production budget of a qualifying video game for expenditure in relation to goods or services used or consumed in the UK.
In 2015/16 GBP 45 million was paid in VGTR in response to 130 claims for tax relief. Since video games tax relief was introduced in April 2014 a total of 135 claims have been made, with UK expenditure of GBP 147 million.