With the Creative Industries Tax Relief, if you are a sole trader or in partnership and your business turnover is below the VAT threshold of £85,000, you can claim tax relief on up to £50,000 of your qualifying creative expenditure.
What is Creative Industries Tax Relief?
Creative Industries Tax Relief is a British government relief introduced in 2000 to encourage investment in the creative economy. They offer qualifying companies, who are based anywhere in the world and make cultural goods or services available to customers in the UK, with up to 100% tax relief on their profits.
What benefits does Creative Industries Tax Relief offer?
Creative Industries Tax Relief provides an 80% tax deduction on qualifying expenditure related to the creation of a production or installation art work in 2D, 3D, animation or live action. It also offers a 100% tax deduction on qualifying expenditure incurred or paid to create a film.
What's the process for applying for creative industries tax relief?
There are two types of relief schemes:
One-year relief, which provides 100% relief on qualifying expenditure incurred in the year of assessment up to £250,000, and a rate of 25% thereafter.
Enterprise zones relief scheme (EYRS) which provides 100% relief on qualifying expenditure incurred in the year of assessment and 100% relief for one year from the date of purchase thereafter.
How to apply creative industries tax relief to your business?
The Creative Industries Tax Relief is provided by the U.K. Government to support the industry and help it grow. It is designed to benefit people who are making a living in the creative industries which includes film, TV and video production, publishing and theatre.
The tax relief can be claimed by a business or individual taxpayer and is an annual award of up to 25% of qualifying expenditure from April 2018-March 2019 on qualifying creative assets i.e. expenditure on labour (whether incurred or not), materials or other costs that form part of a project for which you are claiming the relief.
An individual can only claim this tax relief if they meet these criteria:
You must have spent at least three months in Great Britain during the tax year in which you make the claim.
You must be employed under a contract of employment, or self-employed as either an individual or a partner in a partnership.
The qualifying expenditure must have been incurred during the tax year in which you claim the relief or during either of the two preceding tax years.
Conclusion
The Creative Industries Tax Relief is a game-changer for the UK economy. It will be of great benefit to all creatives and those that work within the industry. It will also help build a more balanced, sustainable, and vibrant economy.
If you want to know if you qualify for Creative Industry Tax Relief, or if you're looking for loans and funding to finance your creative venture, get in touch with Adsum today.
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