A new, more generous tax credit package for British film, television and video game producers went into effect January 1, including an extra £42,500 ($54,000+ USD) in relief for children’s TV, animated TV and animated film production as well as £5,000 in relief for high-end TV, film or video game production. To ensure fairness, the uplift for animation will be extended to include animated films as well as TV programs.
The Audio-Visual Expenditure Credit and the Video Games Expenditure Credit replace the previous schemes for these sectors, offering all companies more tax relief, greater flexibility in production decisions and greater clarity about the amount of credit available to them. The U.K.’s creative industry is already worth £126 billion, and the nation has the largest video game employee base in Europe, at nearly 21,000 by the last estimate.
“We are backing the makers of the next Barbie, Happy Valley and Grand Theft Auto with this new, more generous, tax credit system for British production talent,” Financial Secretary to the Treasury Nigel Huddleston commented in the Government’s announcement. “The U.K. is a world leader in creativity, and we want to ensure that continues well into the future by making it easier for British film, TV and video games to thrive.”
The credits will be calculated directly from a production or game’s qualifying expenditure, instead of being an adjustment to the company’s taxable profit. Qualifying expenditure will remain broadly unchanged. For the Video Games Expenditure Credit, to align the conditions with those for film and TV, at least 10% of expenditure has to be ‘used or consumed’ in the U.K.
Animation and children’s TV productions will be eligible for a higher credit rate of 39%, a rate increase of 4.25% under the previous reliefs. The 34% credit rate for film, high end TV and video games is roughly equivalent to a rate increase of 0.5% under the previous tax reliefs.
[Source: HM Treasury via Gov.UK]
