Update on the Audio-Visual Expenditure Credit legislation
As you will know, last year the government confirmed its commitment to the UK’s audio-visual tax reliefs and, after consultation, announced a number of changes to the current rules, releasing draft legislation in July 2023. The definitive detail of those changes was announced as part of the Autumn Statement, where the government published revised legislation on the proposed reform of the film, television and video games tax reliefs to expenditure credits.
With specific regard to film and television, the key points covered by the legislation are summarised below.
Highlights
Retained elements
Many of the familiar features of the existing Creative Sector Tax Relief system have been retained, including:
Expenditure Credit
The Expenditure Credit will be received net of a tax deduction at the main rate of corporation tax (currently 25%), so the gross and net value of the relief will be:
Additional updates
The main corporation tax rate sum deducted from the gross credit can be utilised in various ways, including being surrendered to other group companies and used to discharge part of their own corporation tax liabilities.
The expenditure credit will be available to be claimed provided that the company is not in liquidation or administration.
“Films” and “television programmes” continue to be separately defined, with films needing to have an intention for theatrical release in order to qualify, and television programmes needing to have an intention for broadcast. The ability to change track from film to HETV has been re-introduced.
For TV programmes (other than animations or children’s programmes) each episode must have a slot length greater than 20 minutes in order to qualify (previously 30 minutes). It will not be possible to aggregate multiple shorter episodes to achieve this 20-minute threshold – for example a series consisting of three 10-minute episodes will not qualify.
Transitional rules
The government has also sent out the following transition rules for film and television:
Timeline
The implementation timeline, and related eligibility to claim under the old or new regime is outlined as follows. Click on the graphic below to display a larger image.
If you would like to discuss any of the issues raised above, do please get in touch with your usual Saffery partner at the earliest opportunity.