Creative sector set to benefit from tax break
THE North West’s creative sector is expected to benefit from tax breaks designed to support home grown television, animation and video game production.
Manchester, which has the largest concentration of employment in the creative industries outside London, is well placed to benefit from the changes, which came into effect on April 1.
Companies will be able to claim a payable tax credit from HM Revenue & Customs against production costs.
According to research by the North West Fund 14,000 jobs were created in the region in the information and communications sector, which includes jobs in the digital and creative sectors, between 2008-12. Numbers rose to 103,000, up 16%.
But Ian Rowland, a tax specialist at the Manchester office of accountancy firm Grant Thornton, said the headline cash credit of 25% is not quite as generous as it may seem.
He said: “In reality it’s a 20% relief as production costs are limited to a maximum of 80% of the qualifying spend. For all that, the industry has campaigned for this tax break for 10 years-plus and will be very pleased with the outcome.
“Major productions like Birdsong, The Tudors or the Julian Fellowes version of Titanic were made abroad partly for tax reasons. The new measures will effectively make producing TV programmes in the UK far more competitive and allow British companies to compete with rivals in Canada, Ireland and South Africa which have enjoyed substantial tax breaks for some time.
“These corporate tax reliefs are released as part of a package of measures to support technological innovation and help digital, creative and other high technology industries to grow in the UK economy.”
To be eligible programme must be intended for broadcast, and at least 25% of the core expenditure must be UK expenditure. Excluded programmes include advertisements, current affairs, news, and game shows.
Simon Hall is managing director of animation house CHF Entertainment which is preparing to launch in Manchester. He said: “The Government’s decision to offer tax relief will have an incredible impact on the creative industries and will encourage animation businesses to stay in the UK.
“More and more animators have been relocating overseas to countries such as Ireland and Canada, where tax incentives can slash the cost of production. In the last couple of years we have lost a lot of talented animators to overseas ventures because it was cheaper to make animation abroad.
“Tax incentives in the UK will not only encourage production talent to remain in this country, but it will make it a much more attractive proposition to potential investors.”
