The introduction of targeted tax reliefs for the creative sector is welcome and should raise the UK’s profile internationally through an increase in the production of culturally British content. The proposed rates of relief are generous, especially when compared with the existing R&D tax relief for large companies.
The treatment of each game/programme as a separate trade for the purposes of the reliefs will result in a heavy compliance burden as it will be necessary for companies to track the costs and income for each production separately. However, it is good news that any losses arising from the new reliefs (which are not surrendered for the cash tax credit) may be carried forward and treated as a current year loss in the following period, maximising, for example, group relief opportunities.
Elements of the regime are complex and we would urge companies with relevant activities to act now and assess how they may benefit from it.