BRITISH CERTIFICATION AND TAX RELIEF
In order to qualify for the UK’s creative sector tax reliefs, all films, animation and television programmes or video games must be certified as British through the cultural test or qualify as an official co-production to support the production of film and high-end TV across the UK, further, the government will provide £2.1 million of new funding next year for the British Film Commission and the British Film Institute Certification Unit. Furthermore, the government will review public investment in Research and Development spending for the creative industries to a Spending Review timeframe.
Find out how to qualify your film, high-end television programme, animation programme, children’s television programme or video game as British.
Funding information is also accessible via the links.
How do you qualify?
FILM: At the end of the day, your accountant and auditor will need to satisfy the Films (Certification) Regulations 2006 to accompany the application for Final Certification as a British film under Schedule 1 to the Films Act 1985. Read through the BFI’s guidance on the Cultural Test for Film.
ANIMATION: Likewise, there is a very helpful page for the Cultural Test for Animation.
Here at the Backstage Centre we look forward to working with our clients who can receive further incentives following the Autumn Statement. But, what about the details? And when do these initiatives go ‘live’?
The government has published a call for evidence on recent trends in the visual effects industry. This will inform the design of additional tax relief for expenditure on visual effects, which the government intends to deliver through the Audio-Visual Expenditure Credit (AVEC). The government intends to consult on the detailed policy design of further support and intends to implement changes to the expenditure credit from April 2025, which means we are some way away from the fine details.
This new approach will also see an extension of uplifted relief for animated television content to include animation films which will be eligible for a 5% uplift in relief under the Audio-Visual Expenditure Credit.
In summary, (we do like abbreviations….you won’t be disappointed!)
The audio-visual expenditure credit (AVEC) will replace the current film, high-end TV (HETV), animation and children’s TV tax reliefs, while the video games expenditure credit (VGEC) will replace video games tax relief (VGTR).
Under the current schemes, relief is given by way of an additional deduction from profits or surrendering a loss for the tax credit. Under AVEC and VGEC, companies will instead receive an above-the-line tax credit based on qualifying expenditures. This will be taxable at the main rate of corporation tax (CT). Whether there are further changes to CT we are yet to learn.
However, it should be noted that the Capital allowances ‘full expensing’ will be made permanent in the Autumn Finance Bill 2023, so that investments made by companies in qualifying plant and machinery, after 1 April 2026, will continue to qualify for a 100% first-year allowance for main rate assets, and a 50% first-year allowance for special rate (including long life) assets. Cars, assets for leasing and second-hand assets will be excluded from these 100% and 50% first-year allowances. At last, something for the likes of us providing the studio spaces.
The Autumn Statement can be read in full here.