A Guide to Taxes and Reliefs for UK films and TV Productions
We walk you through the key taxes and reliefs you need to know about for your production
Taxes to be aware of when making a UK Film or Television Production.
We all likely recall the bold UK government advert claiming taxes don’t have to be taxing. When it comes to production-related taxes, I have to agree—they’re right. Sure, there are a few challenging elements, but overall, it doesn’t have to be a taxing ordeal. In this article, I’ll guide you through the key taxes and reliefs to ensure your production isn’t overly burdensome.
UK Creative industry Tax relief and Audio-Visual Expenditure Credit (AVEC)
It’s only fitting to begin by exploring how you can cash in on taxes – enter the UK Tax Relief or the Audio Visual Expenditure credit. This government scheme is a lifeline for the creative industry, applicable to Film, High-End Television, Animation, and Children’s TV productions. You can score a cool 25% cashback on your spend through the UK Tax Relief or an impressive 34% (actual rate 25.5%) for Films and High-End TV, or a whopping 39% (actual rate 29.25%) for Children’s or Animation productions, thanks to the new Audio Visual Expenditure credit.
These incentives are the government’s way of championing the UK film and television sector. In 2022 alone, a staggering £517 million was doled out in relief to 670 film companies, and £829 million to 380 television companies.
Sure, there are a few caveats, and the percentages may shift based on your production’s nature. However, this incentive is up for grabs for all qualifying productions. To claim, you’ll need a BFI Certificate – interim or final, and you can find the details for that here.
Picture this: you’re in the black at the end of the financial year. What does that mean for your pocket?
Until March 31, 2023, the UK corporation tax rate held steady at a flat 19%. But, as of April 1, 2023, things got profit-dependent. Here’s the lowdown on how this impacts your bottom line:
- Small Profits Rate: If you rake in up to £50,000, you’re looking at a sweet 19% tax rate. It’s called the ‘small profits rate,’ and it’s your friend.
- Blended Rate: For profits between £50,000 and £250,000, enter the blended rate zone, fluctuating between 19% and 25%. Keep an eye on that sliding scale.
- Main Rate: Once you cross the £250,000 profit line, brace yourself for the ‘main rate’ of 25%. It’s the big leagues, but that’s where the success tax kicks in.
Value Added Tax (VAT)
This tax can be a game-changer for your production’s cash flow. There are two paths to VAT registration: compulsory (when your taxable turnover hits £85,000) or voluntary (if you’re diving into Vatable services or goods). Which a film or TV production is.
But why jump in early? It’s simple – if your project involves dealing with VAT-registered suppliers, they’ll tack on VAT for their services. Registering early lets you reclaim that VAT slice, potentially putting money back in your pocket through an HMRC cash payment.
And there’s a bonus – while most businesses file VAT returns quarterly, if you’re often in a repayment situation, you can go monthly. That’s a serious boost to your production’s cash flow.
Just remember, if you’re VAT-registered, slap on an extra 20% on the invoices for your UK customers.
This tax often gets overlooked or pushed to the last minute, especially as film and television traditionally are made up of contractor and self-employed workers. However, that’s a mistake. HMRC has recently tightened the screws on who qualifies as a Schedule D worker.
Before you dive into contracts with your crew, it’s crucial to check HMRC’s Appendix 1. This list outlines roles that HMRC typically sees as self-employed.
If a crew or cast member needs or prefers to be on the payroll, buckle up for the following tax considerations:
- PAYE: This deduction hits the employee’s gross salary. There are tax bands; details can be found on the HMRC website below.
- Employee National Insurance: Another cut into the employee’s gross salary.
- Employers National Insurance: Brace yourself, production companies. This one’s on you, and for the tax year 23/24, it’s a hefty 13.8%. Good news though – there’s an employers Tax allowance available on up to £5,000 in the tax year 23/24
For all the detailed tax bands and allowances, head to the HMRC website:https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2023-to-2024
Foreign Entertainer Unit (Withholding Tax)
Last but certainly not least, let’s talk about Withholding Tax on foreign entertainers. It’s pretty common to have non-UK talent in your UK production. When that happens, you might need to withhold tax if their payment exceeds the personal allowance threshold.
This deduction comes straight from the performer’s cost, not an extra tax for the production. But beware – if you fail to declare, HMRC might knock on the production company’s door to cover the tax cost.
When hashing out terms with a foreign entertainer, make sure to discuss the withholding tax upfront. It can get awkward if they end up with less than they expected. Avoid surprises!”
So here we are, this is a quick rundown on the key taxes impacting you and your production. Remember, this guide is just the tip of the iceberg. We strongly advise chatting with an accountant about each of these taxes and reliefs. I hope I lived up to my promise of taxes not be too taxing.
Need more guidance? Don’t hesitate to reach out to Alliotts’ Media Team
Junior Manager - Media Sector
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