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Revised creative industry tax credits announced in Chancellor's March Budget

Derek Hill


United Kingdom

Since changes to the creative industry tax legislation from the 2014 Autumn Statement. There have been further amendments to this ever changing area of law following the Chancellor's 2015 budget

In the previous edition of this bulletin, we outlined the key changes to the creative industry tax credits legislation from the Autumn Statement of 2014. There have been further amendments to this ever changing area of law following the Chancellor's budget in March 2015.

Film tax relief will be increased to 25% regardless of budget level for all qualifying core expenditure and for all eligible film productions. This is in contrast to the previous rate of 25% for the first £20 million of qualifying expenditure and 20% to amounts exceeding £20 million. This legislative change will be effective as soon as it is given state aid approval.  The Chancellor will also modernise the cultural test used to judge whether a film qualifies for support.

High-end Television Tax Relief has also been reviewed in the Budget. Mr Osborne has reduced the minimum UK expenditure requirement from 25% to 10% as well as proposing the same modernisation change to the cultural test as for film tax relief.

The new Children's Television Tax Relief became effective from 1 April 2015. In contrast to High-end Television Tax Relief, Children's Television Tax Relief is extended from draft provisions to also apply to children's programmes that are game shows and competitions with small prize pots.  Orchestra Tax Relief is expected to be introduced with effect from 1 April 2016, and is expected to apply to production companies engaging in live orchestral performances.  The definition of "orchestral performance" remains to be finalised, but the most recent consultation response sets out various requirements, including that the orchestra's players must be the main focus of the performance; a minimum of twelve performers should be present for most performances; at least one of the string, woodwind, brass and percussion sections must be present at most performances; and there will be some flexibility on music genres (so that occasionally including rock or pop would not disqualify an orchestra from the relief).  Charitable companies are not expected to be excluded from the relief.

The budget was received very positively by the creative industry. For example, Adrian Wootton, CEO of the British Film Commission and Film commented that "governmental support has proven invaluable, so the new Children’s Television Tax Relief is an incredibly positive step. Similarly, the enhancements to the high-end television…and film tax reliefs will make the UK an even more popular destination for international clients and potential co-producers."

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