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Creating Extra Cash-flow

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Newsletter issue - October 2014

Could your creative company benefit from a boost to its cash flow? If it produces computer games, films, high-end TV or animation programmes, it may qualify for a new payable tax credit.

All of these products can qualify for extra tax relief if they can be certified as culturally British, and at least a quarter of the core production costs are incurred in the UK. There are some other conditions:

  • only businesses trading as companies can qualify for the tax relief, not individuals or partnerships; and
  • the product must be intended for release to, or to be broadcast to, the general public, not produced for training or advertising purposes.

High-end TV programmes are essentially quality drama; not news, current affairs or quiz shows. Unfortunately producing original music doesn't qualify as a creative product for these tax reliefs.

There are separate tax relief schemes for the different categories of products, so it is important to look at the detail for your particular sector. However they all work in broadly the same way: the company can claim an extra 100% deduction for up to 80% of the core production costs. Say the company spends £100,000 in the UK on producing a TV animation programme, if the tax relief applies it would claim an enhanced deduction for those core costs of £180,000.

If your company makes a loss after this deduction, that loss can be surrendered for a payable tax credit. Our tax experts can guide you through the detail of these new tax reliefs.