Earlier this month, Jeremy Hunt delivered the 2024 Spring Budget, based on the Economic and Fiscal outlook provided by the Office for Budget Responsibility (OBR). In front of what can only be described as a raucous audience of MPs, Hunt outlined several policies that will impact individuals and businesses – including the UK’s creative sectors.
Based on the extreme growth of the UK creative industries in recent years, Hunt announced £1 billion in additional tax reliefs for the sector. Given that in 2022 the creative industries contributed £125 billion in Gross Value Added, and currently employs 2.4 million people across the UK, it’s hardly surprising that it aligns with the government’s goals to restore the economy and boost employment across the nation.
But what do the changes target? In this week’s Tax Tuesday, we’re delving into the recently announced policies and what they mean for the creative industries.
Introducing the UK Independent Film Tax Credit (IFTC)
Designed to facilitate the creation of independent film projects, the IFTC will allow eligible film productions to claim an enhanced 53% rate of Audio-Visual Expenditure Credit (AVEC).
The credit is only available to films that already qualify for AVEC with a production budget up to £15 million and a start date on or after 1st April 2024. To assess the eligibility of productions for the IFTC, the British Film Institute has launched a new test. To pass this test, films must have at least one of the following:
- A UK writer, or
- A UK director, or
- Certification as an official UK co-production.
It’s important to note that because the rate has been calculated using independent film sector trends, productions claiming the IFTC cannot also make separate claims for the visual effects and animation reliefs.
Qualifying companies can claim IFTC on up to 80% of core expenditure on a film, or on the full amount of UK core expenditure, whichever is less. Here, core expenditure refers to expenditure incurred on producing the film itself.
Changes to Audio-Visual Expenditure Credit
To improve the attractiveness of the UK as a filming destination, Hunt announced that the tax relief for UK visual effects costs in film and high-end TV would increase by 5%. Similarly, the 80% cap on qualifying expenditure will be removed for UK visual effects costs.
Higher rates for theatre, orchestra, museum and gallery tax reliefs
It isn’t just the film and TV sectors that are being prioritised, but theatres, orchestras, museums and galleries also. Recognising the impact of the COVID-19 pandemic and subsequent lockdowns, the Chancellor confirmed that the current higher rates for Theatre Tax Relief (TTR), Orchestra Tax Relief (OTR), and Museums and Galleries Exhibition Tax Relief (MGETR) will be made permanent.
From April 2025, the TTR and MGETR rate for non-touring productions will be 40%, while the OTR for all productions, and TTR and MGETR for touring productions will be 45%.
Providing new funding to the National Theatre
Acknowledging the National Theatre as a staple institution within the UK’s performing arts sector, Hunt announced that the government will provide £26.4 million to fund an upgrade to the National Theatre’s stages and infrastructure.
It’s encouraging to see government support for the nation’s creative industries, through enhanced tax credits and reliefs. We look forward to seeing the status of British film, TV and other creative sectors continue to grow internationally.
How can we help?
If you operate in the creative sector and would like advice relating to any of the above, please call 0161 905 1616 or email tax@haroldsharp.co.uk