Refundable expense credit reform
As announced in the Spring Budget 2023, the government will reform the film, TV and video games tax reliefs to refundable expenditure credits. Full details of the expenditure credits will be published alongside draft legislation in the summer of 2023, and stakeholders will be able to comment.
The government will legislate two expenditure credits:
- Audio-Visual Expenditure Credit – to cover the four existing film and TV tax reliefs. The existing specific eligibility criteria of each relief will be preserved.
- Video Games Expenditure Credit.
Video games, film and high-end TV, will have a rate of 34%. Animation and children’s TV will have a rate of 39%.
The reform to expenditure credits will change the way that relief is calculated. The expenditure credits will be calculated directly from qualifying expenditures instead of adjusting the company’s taxable profit under the existing regime.
The expenditure credits will be available for companies to claim regarding accounting periods ending on or after 1 January 2024. Productions that have claimed relief under the current system can opt into the new regime.
The current tax reliefs will close to new productions from 1 April 2025. Films and TV programmes that have not concluded principal photography and video games that have not concluded development by 1 April 2025 may continue to claim relief under the current regime until 31 March 2027.
Reforms to high-end TV tax relief
As announced in the Spring Budget 2023, the government will legislate in Finance Bill 2023-24 to reduce the minimum slot length required for high-end TV production to be eligible for the Audio-Visual Expenditure Credit. The minimum slot length will be reduced from 30 to 20 minutes. This legislation will apply to every individual episode. This change will take effect from 1 January 2024. The current minimum slot length legislation for the existing high-end TV tax relief will remain unchanged.
The government will legislate in Finance Bill 2023-24 a definition of a documentary.
The summary of responses to the consultation on audio-visual tax reliefs provides more information. The government will publish draft legislation for the definition in the summer of 2023.
Reforms to video games tax relief
The government will legislate in Finance Bill 2023-24 to introduce the Video Games Expenditure Credit from 1 January 2024.
This credit will differ from the existing video games tax relief regime regarding the type of expenditure that will qualify for relief. Expenditure will only qualify for ‘goods and services that are used or consumed in the UK.’
Games in development on 1 April 2025 may continue to claim the existing video games tax relief. It will, therefore, still be able to claim on ‘expenditure that is incurred on goods and services provided from within the UK or EEA’ until 31 March 2027, when the relief will sunset.
The eligibility requirements for the Video Games Expenditure credit will require 10% of expenditure on goods and services used or consumed in the UK from its introduction on 1 January 2024.
