UK: Creative Sector Reliefs

Last Updated: 27 September 2013
Article by Laurence Bard, Rachel Baber, Beverley Scott and Paul Duckworth

Tax Incentives For Companies

Legislation has been included in Finance Act 2013 to provide tax incentives for expenditure incurred by companies within the creative sector on or after 1 April 2013.

The creative sector reliefs offer tax advantages for companies engaged in high-end TV programme production, animation production and video games development. The Government wants to build on the success of film tax relief and on the experience of other countries offering similar targeted relief.

To qualify for the relief, animation and high-end TV programmes and video games will need to be certified as a British cultural product to satisfy EU state aid requirements.

State aid approval has now been received for high-end TV and animation reliefs however the European Commission has requested further information before granting approval to the relief for video games. It is hoped that the Commission will recognise the importance of the new relief and state aid approval for the video games sector will follow in due course.

Consultation on further relief for the visual effects industry was issued in May 2013. One option proposed is to increase the payable credit under the film tax relief scheme from 20% to 25% for large budget films (production budget of £20m or more) where 80% of qualifying visual effects expenditure is UK expenditure (with terms yet to be defined).

Overview of the reliefs

The Finance Act 2013 creative sector relief enables a qualifying company to obtain an enhanced deduction in computing their taxable profits, and where that additional deduction results in a loss, the company can surrender that loss for a repayable tax credit.

Only companies liable to UK corporation tax are eligible for relief.

The enhanced deduction is limited to the lower of the qualifying expenditure that is UK care expenditure and 80% of total care expenditure incurred on or after 1 April 2013.

If the business is loss-making, any resultant loss may be surrendered for a payable tax credit of 25%. The amount of the loss that can be surrendered is restricted to a cap of the lower of UK care expenditure and 80% of total care expenditure. There are special rules for the treatment of any losses incurred in the business (including the enhanced element) which have not been surrendered for a tax credit.

It will not be possible to claim creative sector relief where the company is entitled to an R&D expenditure credit in respect of the expenditure or has obtained an enhanced deduction under the R&D relief scheme.

Conditions for the reliefs

TV and animation

The relief is available to television production companies, and applies to drama, documentary and animation programmes. Drama for this purpose includes comedy, but excludes programmes such as advertisements, live performances and quiz shows, news broadcasts or current affairs and training programmes.

In the case of TV programmes that are not animation, the programme must have a slot length of more than 30 minutes, and average core expenditure per hour of slot length of at least £1m. A drama or documentary that includes animation is treated as animation if the core expenditure on completed animation is at least 51% of total core expenditure.

For the programme to be classified as qualifying for these purposes:

  • it must be intended for broadcast to the general public;
  • it must meet the cultural test by being certified by the Secretary of State as a British programme (see below); and
  • at least 25% of the core expenditure incurred by the company on the relevant programme must be UK expenditure.

High-end TV, animation and video games tax reliefs are subject to cultural tests similar to that of the UK film tax incentives. The cultural tests pass mark is 16 points from a possible total of 31. Points are awarded in the following four areas: cultural content, cultural contribution, use of UK cultural hubs and use of UK/EEA cultural practitioners.

Tax relief is only available for core expenditure. This is a narrower definition than production expenditure.

Production expenditure means all expenditure on television production activities in connection with the programme, including the development, pre-production, principal photography and post production of the programme. If images are generated by computer, references to principal photography mean the generation of those images.

Core expenditure means the pre-production, principal photography and post production costs of the programme. UK core expenditure refers to goods or services that are used or consumed in the UK.

The relief is available for core expenditure incurred on or after 1 April 2013 (with the requirement that it be paid within four months of the end of the accounting period).

Video games

The relief can be claimed by a video games development company provided the video game (video game takes its ordinary meaning) meets the following conditions:

  • it must be intended for supply to the general public, as determined when video production activities begin;
  • it must meet the cultural test by being certified by the Secretary of State as a British video game; and
  • at least 25% of the core expenditure incurred by the company must be UK expenditure.

Core expenditure in relation to video games means expenditure on designing, producing and testing. It does not, however, include expenditure on designing the initial concept for the game or expenditure on debugging a completed video game or carrying out maintenance in connection with the game.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Paul Duckworth
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.