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Tax Reliefs for Creative Sector after Brexit

New Regulations were made last month to ensure that the production costs of films, TV programmes and video games that are culturally British will continue to qualify once the UK leaves the EU. The new Regulations also ensure that British production staff would continue to be recognised as qualifying production personnel for tax relief purposes.

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2 November 2018

Tax Reliefs for Creative Sector after BREXIT

Over the past few years, the government has provided a package of tax reliefs for the creative industry to encourage investment in the a range of creative businesses, including film, television programmes, video games as well as animation, theatre and museum etc. If relevant conditions are met, production companies are entitled to either an additional deduction from corporation tax, or if a loss is surrendered a tax credit of 25% of the loss.

Broadly speaking, the tax reliefs are only available to qualifying British productions and must either pass the Cultural Test or qualify as an official co-production. The Cultural Test generally requires the production to have a strong EEA link.

On 22 October 2018, the government made the Cultural Tests (Films, Television Programmes and Video Games) (Amendment) (EU Exit) Regulations 2018 (SI 2018/1105), which amend the Cultural Test applied to determine whether television, video games and film productions are entitled to tax relief to reflect Brexit. The changes are needed as qualification for relief depends on sufficient connection with the EEA, which would exclude the UK following Brexit. The new Regulations will take effect from the date on which the UK leaves the EU. The Regulations extend existing references to the EEA to “the UK or the EEA”, and do not remove references to the EEA entirely, so the scope of the reliefs will not be narrowed following Brexit.

The above information is intended merely to highlight issues and not to be comprehensive, nor to provide advice. Should you have any questions on issues reported here or on other areas, please contact one of your regular contacts, or alternatively please contact enquiries@mytaxadviser.co.uk.

 
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