Who’s prone to be affected
Firms claiming tax reduction for movies, high-end TV, animated TV, youngsters’s TV, video video games, theatrical productions, orchestral live shows and museum and gallery exhibitions.
Basic description of the measure
Firms claiming inventive tax reliefs might be required to finish and submit a web based data kind. This may embrace claims made for the brand new expenditure credit: the Audio-Visible Expenditure Credit score ( AVEC ) and the Video Video games Expenditure Credit score ( VGEC ). It additionally contains the cultural tax reliefs: Theatre Tax Reduction ( TTR ), Orchestra Tax Reduction ( OTR ) and Museums and Galleries Exhibition Tax Reduction ( MGETR ).
There will even be some additional modifications launched to the above reliefs to right anomalies and stop abuse.
Coverage goal
The introduction of the knowledge kind and the additional modifications might be applied alongside the introduction of the brand new expenditure credit score regimes. It’s anticipated that these modifications will streamline the method of constructing a declare and help corporations in transitioning to the brand new regimes. The completion and submission of the net data kind will make it simpler to sort out abuse and can scale back the executive burden on HMRC, permitting claims to be processed sooner.
The change from European to UK expenditure will be certain that the cultural reliefs meet our worldwide obligations.
Background to the measure
A session doc entitled “Audio-visual tax reliefs: session” was printed in November 2022 at Autumn Price range. The doc coated proposals to modernise and simplify the audio-visual inventive tax reliefs which embrace Movie Tax Reduction ( FTR ), Excessive-Finish TV ( HETV ) Tax Reduction, Animation Tax Reduction ( ATR ), Kids’s TV Tax Reduction ( CTR ) and Video Video games Tax Reduction ( VGTR ), in addition to overhaul how tax credit score is calculated. The session sought views to simplify and modernise the declare for reliefs, increase progress within the sectors and make sure the reliefs stay sustainable. The session closed on 9 February 2023.
A response doc to the session was printed on 15 March 2023 at Spring Price range. It was introduced that the prevailing audio-visual reliefs would get replaced by new expenditure credit score regimes. It is necessary that the brand new regimes are safeguarded from abuse, and so the federal government can also be taking this chance to right anomalies and be certain that the credit stay sustainable.
Detailed proposal
For AVEC and VGEC , this measure will take impact from 1 January 2024 to align with the introduction of the brand new regimes.
The modifications in relation to the cultural reliefs, together with necessary use of the of the net data kind, will come into impact from 1 April 2024.
Present legislation
The present legislation is contained in Components 15,15A, 15B, 15C, 15D and 15E of the Company Tax Act 2009 (CTA 2009).
Paragraphs 83S to 83W of Schedule 18 to Finance Act 1998 set out the executive provisions for all of the inventive reliefs.
Proposed revisions
All references are to the Company Tax Act 2009 (CTA 2009) except in any other case said.
Mandating the knowledge kind
A brand new data kind is being launched to enhance the availability of further data, which is able to grow to be necessary for all of the creatives reliefs and credit: AVEC , VGEC , FTR , HETV , ATR , CTR , VGTR , TTR , OTR and MGETR .
Measures to handle anomalies and unexpected penalties
Paragraph 83W(1) of Schedule 18 to Finance Act 1998 (time restrict for declare) might be amended to outline the time restrict for making a declare.
Paragraph 52 of Schedule 18 to Finance Act 1998 might be amended in order that the restrictions on the making of a discovery evaluation don’t apply within the case of overpaid tax credit for all creatives reliefs.
Sections 1217GB,1217RB and 1218ZCC might be amended in order that ‘European Expenditure’ might be changed by ‘UK Expenditure’. The transitional preparations will permit corporations to proceed utilizing the previous rule till 31 March 2025 in relation to productions which have begun the manufacturing section earlier than 1 April 2024. VGEC will differ from VGTR in that solely UK expenditure will ever be eligible.
A rule might be launched to limit credit score funds to corporations that aren’t ‘going issues’. This might be launched to AVEC , VGEC , and the cultural reliefs.
Linked individuals rule
A linked individuals rule might be launched that restricts reduction on funds which can be made between linked individuals, to a most of the quantity of related expenditure incurred by the linked particular person. This might be launched to AVEC , VGEC , and the cultural reliefs.
Abstract of impacts
Exchequer affect (£ million)
2023 to 2024 2024 to 2025 2025 to 2026 2026 to 2027 2027 to 2028 2028 to 2029 nil negligible -15 -40 -45 -50
These figures are set out in Desk 4.1 of Spring Price range 2023 as ‘Inventive reliefs: reform of audio-visual tax reliefs into expenditure credit with improve in charges’. These figures incorporate the Exchequer affect of ‘Administrative modifications to the inventive trade tax reliefs’ and have been licensed by the Workplace for Price range Duty. Extra particulars may be discovered within the coverage costings doc printed alongside Spring Price range 2023.
Financial affect
This measure shouldn’t be anticipated to have any important macroeconomic impacts.
Affect on people, households and households
These measures don’t have any affect on people, as they solely have an effect on companies.
Equalities impacts
It’s not anticipated that there might be impacts for these in teams sharing protected traits.
Affect on enterprise together with civil society organisations
These measures are anticipated to have a negligible affect on fewer than 3,000 companies claiming the inventive tax reliefs. One-off prices may embrace familiarisation with the modifications and adapting to a brand new system. Persevering with prices for companies will embrace offering HMRC with extra data. There’s not anticipated to be any additional one-off or persevering with prices.
Buyer expertise is anticipated to enhance as a digital service will assist make the claiming course of less complicated and extra environment friendly. There could also be a barely worsened buyer expertise within the quick time period while companies are adapting to the change. This might be addressed by clear steering and buyer communications.
These measures will not be anticipated to affect civil society organisations.
Operational affect (£ million) (HMRC or different)
No further prices are anticipated because of these modifications.
Different impacts
Different impacts have been thought of and none have been recognized.
Monitoring and analysis
The measures might be monitored via data collected from tax returns.
Additional recommendation
When you’ve got any questions on this alteration, please contact Kerry Pope on Phone: 03000 585740 or e-mail: kerry.pope@hmrc.gov.uk, or Stephanie Martinez on Phone: 03000 519492 or e-mail: stephanie.martinez@hmrc.gov.uk.
