High-end Television Tax Relief
What is High-end Television Tax Relief?
High-end Television Tax Relief was introduced on the 1st April 2013 and is available to television production companies within the Corporation Tax scheme.
High-end Television Tax Relief is available subject to the production company and – the programme – meeting the certain qualifying conditions.
For scripted television projects with a minimum core expenditure of £1 million per broadcast hour, the TV Production Company (TPC) can claim a payable cash rebate of up to 25% on UK qualifying expenditure.
Individual episodes of 30 minutes or less can qualify for the Tax Relief when commissioned together, however the £1 million average core spend per slot hour requirement would still need to be met (e.g. six 25-minute episodes commissioned together would qualify as long as the average core spend was at least £1 million per slot hour).
The Tax Relief is capped at 80% of the core expenditure (i.e. even if you have 100% UK qualifying expenditure, tax relief is only payable on up to 80%).
There is no limit on the budget of the TV project or the amount of relief payable within the 80% cap.
Qualifying as a British co-production
The UK has film co-production agreements with Australia, Canada, China, France, India, Israel, Jamaica, Morocco, New Zealand, Occupied Palestinian Territories, and South Africa. Of these, Australia, Canada, New Zealand, Israel and the Occupied Palestinian Territories also allow for television programmes.
The UK is also a signatory to the European Convention on Cinematographic Co-production.
- There must be a UK production company responsible for all UK elements of the production from beginning to completion.
- There must be corresponding production companies in the other co-producing party countries.
- There must be a co-producer in each country, and an application lodged in each country.
- The decision will be made jointly by the authority in each country.
- The filmmaking contribution from each country will be in proportion to the finance from each country.
Qualifying as British via the cultural test
The Cultural Test for high-end television is points-based, with sections relating to content, cultural contribution, location, and cast and crew.
Projects need to achieve at least 18 from a possible 35 points.
The sections are:
- Cultural content
- Cultural contribution
- Cultural hubs
- Cultural Practitioners
Intention for broadcast
TV projects must be intended for broadcast (including internet). If there is any doubt about the intention, the following factors would count in favour of the programme being intended for broadcast:
- a finance plan written on the basis that the programme will be broadcast,
- a programme of a type commonly broadcast,
- production in a format suitable for broadcast,
- payment to actors and other participants on terms in line with those prevailing for programmes, and
- the relevant person can demonstrate that, when television production activities began, there was an intention to seek a contract for broadcast of the programme.
Television Production Company (TPC)
The TPC responsible for the TV project must be within the UK corporation tax net. The TPC must make the arrangements for pre-production, principal photography, VFX, post & delivery.
It is best to incorporate sooner rather than later, so costs can be included towards the Tax Relief claim. The TPC can be a UK ‘off-the-shelf’ company set up on behalf of an international parent company if required.
Work can be sub-contracted as long as this is reflected in the TPC’s accounts. Similarly, loan-out companies can be used as long as this is reflected in the TPC’s accounts.
Minimum UK expenditure and included costs
Minimum UK expenditure
At least 10% of the television project’s core expenditure must be UK expenditure.
UK qualifying production expenditure is defined as expenditure ‘used or consumed’ in the UK. That is, costs incurred by the TPC on filming activities – such as pre-production, principal photography, visual effects and post production – that take place within the UK, irrespective of the nationality of the persons carrying out the activity.
‘Above-the-line’ costs, including fees for actors and directors, are included, irrespective of nationality.
Core expenditure incurred at a later stage on a project can also be included, where there are ‘residuals’ to be paid; for example, further payments to actors and directors.
- Option payments for book rights
- Errors & Omissions insurance
- Capital Expenditure
There is no obligation to carry out all production activity in the UK; it is possible to qualify for the UK High-end Television Relief by carrying out elements of the production process in the UK, e.g. VFX/post or principal photography, as long as the minimum expenditure requirement is met (10%) and all other qualifying criteria are satisfied.
Even if only certain elements of the production process are taking place in the UK e.g. VFX/post, it is essential that the TPC is incorporated in the UK as early as possible in order to qualify for the UK High-end Television Tax Relief.
Also, in addition to VFX/post costs qualifying for the UK High-end Television Tax Relief, the prorated ‘neutral’ costs (qualifying costs which are spread throughout the production process, including senior producers, writers, director, insurances) will also qualify whilst activity is based in the UK i.e. if VFX/post costs amount to 20% of the total core expenditure, 20% of ‘neutral’ costs will also qualify whilst activity is based in the UK.
Interim claims can be made (at the conclusion of principal photography, for example), so that pro-rated tax relief can contribute to post-production costs.
High-end Television Tax Relief has been supported and maintained by both leading UK political parties, and the UK’s exit from the European Union should not negatively impact the High-end Television Tax Relief.
The UK has a range of national and regional filming incentives which can be combined with the High-end Television Tax Relief. There is no cap on funds available, and there is no ‘sunset’ date.
It is possible to combine the UK High-end Television Tax Relief with incentives from non-UK jurisdictions either under a Production Service Agreement or by qualifying as an official co-production. Ask us for more details.