A Little Light Relief…
An explanation of what’s known so far about the new Animation Tax Relief.
This is a guest article by CMC regular, Tony Collingwood, who is a member of the PACT Children’s Committee.
The tax relief has been pegged at 25% of the admissible UK core spend. In order to understand how much of your actual budget is going to be covered by this tax relief it is important to dig a little deeper into the detail.The proposed Animation Tax Relief was confirmed by George Osborne in his Autumn Statement.
First of all, the amount of UK core spend that is admissible is capped at a maximum of 80% of the core spend. This is a European rule which applies in all EU countries, so we’re looking at 25% of 80%.
Also, certain line items are not admissible for tax relief. These have yet to be confirmed by the Government. However we expect that the three main ones will be the cost of legal, the cost of borrowing money, and any other grants that go towards your budget; for example an EU Media Grant. So, in real terms, the amount of your full budget eligible for tax relief will be approximately 18 – 20% in real cash terms.
More work still has to be done on the finer details of the plan, including explanatory documents from the government on how to apply. Hopefully, in layman’s terms!
We are hoping that the Tax Relief will come into place in the next budget on April 1st. Any money spent on a show before that date will not be eligible. However, if you are already in production before that date, then we assume money spent after that date will be eligible.
It is worth noting that shows can only quality after passing a cultural test. This is based on achieving a number of points covering British and European crews and British subject matter. The Cultural Test has not yet been locked in stone. This needs to be approved by Brussels before the tax reliefs can come into force.
Further good news is that the government have offered to match voluntary industry contributions to the Skills Investment Fund managed by Skillset. They have agreed to match contributions to a cap of £6 million over 2 years. We are hoping that those who access the tax break will contribute to the Skillset fund to help train and expand the skills needed for our industry.