The audio-visual tax reliefs are intended to support and incentivise the production of culturally British film, animation, high-end TV, children’s TV and video games.
Film tax relief has been around longer than any other creative relief in the UK. The original film tax relief was introduced in 1992 (Section 42 of the Finance (No. 2) Act 1992). And much has changed, even since the introduction of the current iteration of film tax relief, introduced in 2007. The Government is now seeking to support the growth of the audio-visual sectors.
There are eight creative industry tax reliefs covering film, animation, high-end TV, children’s TV, video games, theatre, orchestra and museums and galleries. Within these eight reliefs, there are five audio-visual reliefs: film tax relief (FTR), animation tax relief (ATR), high-end TV tax relief (HETV tax relief), children’s TV tax relief (CTR) and video games tax relief (VGTR). This consultation focusses on the five audio-visual tax reliefs. The package of reforms proposed in this consultation aims to simplify and modernise the reliefs and ensure they boost growth in the audio-visual sectors whilst remaining fiscally sustainable.
The objectives of the review are to ensure that:
- The UK has modern audio-visual tax reliefs that enhance the UK’s audio-visual industries;
- The reliefs maximise the contribution of the audio-visual industries to the growth of the UK economy;
- The reliefs remain affordable, with additional costs of the reforms are consistent with the Government’s fiscal rules and commitment to sustainability in the public finances;
- The reliefs are straightforward to administer and that the reformed audio-visual tax reliefs should not significantly increase administrative burdens for businesses or HMRC;
- Current and future commercial needs are anticipated without significant future changes being required;
- The reforms do not create additional avoidance opportunities.
Reforms proposed in the consultation include simplifying the film and TV reliefs (FTR, ATR, HETV tax relief and CTR) by merging them into one tax credit scheme, modernising the criteria for HETV tax relief and defining a documentary in legislation. It covers the EU legacy requirements currently embedded in VGTR and the reform of all of the audio-visual reliefs to above the line, refundable expenditure credits.
The Government is interested in feedback from a wide range of sources, including individuals, companies, representative and professional bodies. This consultation closes at 11:30am on 9 February 2023. It expects reforms to the audio-visual reliefs to be implemented in Spring 2024, but will confirm the timing of implementation after the consultation has ended.
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