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Lights, camera…. Taxes!

Just a decade ago, Northern Ireland’s film and media production sector had little international profile.  Following a number of highly popular and successful films and television programmes in recent years, the Northern Ireland creative industries sector has taken off.

It is not just the country’s beautiful, rural landscape and the vibrant capital city which make it an attractive filming location for overseas producers.  Media productions filmed in Northern Ireland which meet HM Revenue & Customs qualifying criteria can avail of the UK’s creative industry reliefs.  This has seen highly acclaimed local television productions such as “The Fall” benefitting from such incentives.

It is not just local productions using Northern Ireland as a filming location, “Game of Thrones” arguably the most successful TV show of all time, has taken advantage of the UK tax incentives and various funding available from NI Screen.

The inception of the creative industry reliefs started with the UK film tax relief which was introduced in 2007 and has since provided over £2.7 billion of relief to 4,495 films and has been recognised as a great success by both the government and film industry.  Since then, the UK government has extended the relief to seven other creative sectors: video games, high-end television productions, animated television productions, theatrical productions, orchestral concerts and museum or gallery exhibitions. 

In figures published by HM Revenue and Customs, some £771 million in tax relief was paid to qualifying UK films (£469m), video games (£105m), high-end television (£184) and animated programmes (£13m) in the tax year 2017-18.

Creative industry tax reliefs are corporation tax reliefs which permit qualifying companies to make a claim for two types of incentive; either, an enhanced tax deduction at 100% of qualifying expenditure from taxable profits or, where sufficient losses are available, a tax credit cash repayment at 25% of qualifying expenditure with no reinvestment conditions attached to such a receipt.

In order to qualify, the productions must meet a ‘cultural test’ in which the production must be certified as a ‘British film’, ‘British programme’ or ‘British Video Game’.  The cultural tests are all slightly different for each type of production and, as with Video Games Tax Relief, they include some elements that cover the European Economic Area rather than just the UK.  For some reliefs, a minimum slot length must be met, along with a minimum expenditure requirement per hour of show time.

Media tax credits operate in the same way as R&D tax credits.  Due to the highly beneficial incentives available and the similarity in calculating these reliefs, one company cannot make a claim for both.  Some innovative companies who qualify for both reliefs may need to assess which incentive is most beneficial and pick between one or the other.

Overall, if you are a production company operating in the creative industry, you should carry out an investigation to determine if you qualify for the generous tax reliefs that may be available.