Archive for April, 2013

New Tax Relief in the UK for Animation

Corporation Tax relief for the animation, high end TV and video games industries, (’creative industry tax credits’) is available from 1 April 2013, as announced in the 2012 Budget.

The makers of big budget TV shows and animations are being urged to film in the UK and take advantage of the 25% tax breaks.  Since the introduction of film tax relief (FTR) in January 2007, 825 British films have received approximately £800 million in relief.  This relief has now been extended to animation productions, which will allow eligible companies engaged in the production of qualifying animated productions to claim an additional deduction in computing their taxable profits, and where that additional deduction results in a loss, to surrender those losses for a payable tax credit. 

The production must include at least 51% animated content and not be an animation for news, advertising, current affairs or competitions.  The relief is capped at 80% of the projects total budget and is subject to the same rules as FTR.  That is, the animation has to have a budget of at least £1m per hour, be deemed British by the Department of Culture, Media & Sport and a minimum of 25% of their budget must be spent in the UK.  There are approximately 50-100 animation companies in the UK that may benefit from the relief.  Eligible companies may face some one-off and ongoing administrative costs in order to qualify for this relief.  The ongoing costs include costs of claiming the relief and fulfilling the requirement to pass a cultural test for each production.  A tax relief for video games is also in the pipeline.

Jessica Smith


New Media Law LLP

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