Film and Television Tax Reliefs and Credits

Accountancy expert Marc Frank discusses the financial help available for UK film and TV productions in the form of tax reliefs and credits.

Film and television production is seeing a rejuvenation in the UK. This is a testament to the quality of UK-based talent, but can also be partially attributed to the funding that is available to projects on these shores, in the form of tax reliefs and credits. These include the following:

Enterprise Investment Scheme (EIS)

Created to help smaller higher-risk companies to raise finance, the EIS can be a suitable option for film and television businesses that cannot ensure results until a project is finished. The EIS makes investing in these projects lucrative by offering a range of tax reliefs to investors who have bought new shares in any of these companies.

There are different reliefs available in the EIS, including

• Income Tax Relief – which is set at 30% of the cost of the shares.
• Capital Gains Exemption – in which an investor can receive relief on income tax based on the  cost of the shares, given certain conditions.
• Loss Relief – which allows relief from taxation on shares disposed of at a loss.
• Capital Gains Deferral Relief – provided to individuals and trustees of selected trusts, this  allows payment of tax on a capital gain to be deferred, as long as that gain is invested in the shares of another company that qualifies for EIS.

Companies that do qualify for EIS can position themselves as more attractive to investors, given the tax reliefs offered. In order to secure this funding, they need to make sure that they are EIS-compliant. HMRC has a number of guidelines that need to be met in order for a company to qualify as EIS-approved.

At Silver Levene, we have successfully applied for fundraising to the tune of over £30 million on behalf of clients, especially in the media industry. We’ve also seen the applicants through the process, ensuring that they follow guidelines that might otherwise disqualify them from being granted EIS certification and funding.

Seed Enterprise Investment Scheme (SEIS)

Working on the same principles as the EIS, the SEIS is aimed at investment in small and early-stage startup UK businesses. Some of the guidelines differ, but film and television investors can earn up to 50% in tax relief through this scheme.

EU Media Grants

EU MEDIA grants, particularly the MEDIA sub-programme supporting the EU film and audiovisual industries, finances companies that develop, distribute and promote work ‘with a European dimension’. It is split into four broad categories: Producer Support; Distribution; Training and Networks; and Audiences. Having helped UK companies receive £2 million of their costs back in these grants, I can say that the regulatory waters can be treacherous, but are able to be navigated if you are familiar with the many conditions attached to the grants.

Corporation Tax: Creative Industry Tax Reliefs

Consisting of five areas – Film Tax Relief (FTR), Animation Tax Relief (ATR), High-end Television Tax Relief (HTR), Video Games Tax Relief (VGTR) and Theatre Tax Relief (TTR) – the Government’s Creative Industry Tax Reliefs are based upon certain terms and conditions. Film tax deductions can range from 80%- 100% of enhanceable expenditure, or, if operating at a loss, at 20%-25% of the loss, depending on the budget of the film. Again, companies need to fully understand the rules and regulations in order to ensure that they are obtaining and maximising their tax credits. However, in order to qualify, the project must pass a ‘cultural test’ as specified by the British Film Institute (BFI). This denotes that the production is a ‘British film or programme or video game’, and requires formal certification. The role of an accountancy firm is wide-ranging in these cases, extending to the auditing of media reports to ensure that a client receives money back to help fund the project in question.

Regulatory maze

Although the rules and regulations for these tax reliefs and credits can be complicated and nuanced, they can be met, given the right information. It is an exciting time for UK film and television companies, and looking in the right places could help them to gain the funding needed to start a project or to lift a project higher into the stratosphere.

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Marc Franks
Chartered Account and Partner, Silver Levene

Marc Franks is a Chartered Accountant and Partner at Silver Levene. He is an expert advisor for SMEs in the media and entertainment industry, helping his clients to maximise profits and minimise tax.