Creative Industry Tax Relief: What You Need to Know
The United Kingdom offers several tax breaks and incentives for creative individuals working in various industries, creative industry tax relief.
These initiatives are designed to support and encourage the growth of the creative sector, which encompasses areas such as film, television, video games, theatre, music, art, literature and more. Here are some notable tax breaks available to creative people in the UK:
- Film, High-end Television, and Animation Tax Relief: The UK government provides tax relief to eligible British and European Union (EU) productions that pass a cultural test or qualify as an official co-production. This incentive allows qualifying companies to claim a cash rebate on a portion of their production expenditure, providing financial support for the development and production of films, high-end TV series, and animated programs.
- Video Games Tax Relief: The UK video game industry is supported by tax relief, allowing qualifying companies to claim relief on their production expenditure. This relief applies to British and European Economic Area (EEA) companies that pass a cultural test or qualify as an official co-production. It aims to promote the growth and innovation of the UK’s video game sector.
- Theatre Tax Relief: Introduced in 2014, Theatre Tax Relief supports commercial and non-profit theatre productions in the UK. Qualifying theatre companies can claim tax relief on their production costs, including certain pre-production and running costs. This incentive encourages the development and staging of new and touring productions, fostering creativity in the theatre industry.
- Orchestra Tax Relief: Launched in 2016, Orchestra Tax Relief is aimed at supporting symphony orchestras and similar musical ensembles. It provides tax relief for qualifying orchestral concerts, covering various costs associated with performances and rehearsals. This measure aims to sustain and enhance the UK’s orchestral landscape.
- Creative Industry Tax Credits: In addition to the specific tax reliefs mentioned above, creative individuals and companies may also benefit from various tax credits available to the wider creative industry. These include Research and Development (R&D) tax credits, which can be claimed by companies engaged in qualifying R&D activities, and the Patent Box scheme, which reduces the tax rate on profits from patented inventions.
- Artists’ Exemption: The Artists’ Exemption allows qualifying artists in the UK to claim tax relief on their profits from the sale of their artworks. To be eligible, artists must meet certain criteria, including being actively involved in creating original works of art and deriving a significant portion of their income from the sale of their artworks. This exemption aims to alleviate the tax burden on artists and provide them with financial support.
- Authors’ Loan-Out Companies: Authors can set up loan-out companies, commonly known as personal service companies, which allow them to receive income from their creative works through the company. This arrangement can offer tax advantages by providing flexibility in managing income and tax liability, as well as potential cost deductions related to business expenses. However, it is important to comply with the relevant tax regulations and seek professional advice when considering this option.
- Self-Employment Tax Deductions: Many creative people are self-employed and can claim various tax deductions related to their business activities. These deductions may include expenses incurred for materials, studio space, marketing, professional development, and other costs directly related to their artistic or literary work. Keeping accurate records and consulting with a tax professional can help artists and authors maximise their tax deductions.
It is important to note that each creative industry tax relief or incentive has its own eligibility criteria, application process, and compliance requirements. Creative individuals and companies should consult with tax advisors or relevant authorities to ensure they meet the necessary conditions and understand how to access these benefits.
These tax breaks play a crucial role in supporting the creative industries in the UK, attracting talent, encouraging innovation, and fostering economic growth. By providing financial incentives, the government aims to nurture a vibrant and thriving creative sector, further establishing the UK as a global hub for creative talent and production.
For help and advice on creative industry tax relief in the UK, call ARN Hoxton for an informal chat.