15 February 2024

Navigating the Tax Landscape for UK Film and TV Productions: A Producer's Guide

By Triple Exposure

We all remember the government’s bold claim that taxes don’t have to be taxing. When it comes to the world of production-related taxes, there’s truth to that statement. While it may seem daunting, understanding the key taxes and reliefs can turn the process into a manageable one. Let’s dive into the essentials:

1. U.K Creative Industry Tax Relief & Audio-Visual Expenditure Credit (AVEC)

To kick things off, let’s talk about cashing in on taxes with the UK Tax Relief and the Audio Visual Expenditure credit. These are lifelines for the creative industry, spanning Film, High-End Television, Animation, and Children’s TV productions. Under the Creative industry Tax relief you can get a 25% repayment on your incurred spend.

Under the New AVEC you can get whopping 39% (Actual Rate 29.25%) for Children’s or Animation productions and 34% (Actual Rate 25.5%) on High-end TV and Film productions.

These incentives, totalling £517 million for 670 film companies and £829 million for 380 television companies in 2022, are the government’s way of championing the UK film and television sector.

Pro Tip: To claim, secure a BFI Certificate—interim or final. Details here.

2. Corporation Tax: Painting the Profit Picture

As your financial year draws to a close, the UK corporation tax rate becomes a critical factor. Until March 31, 2023, it stood at a flat 19%. Post-April 1, 2023, the game changes. Keep these rates in mind:

  • Small Profits Rate (up to £50,000): A sweet 19%.
  • Blended Rate (£50,000 – £250,000): Fluctuating between 19% and 25%.
  • Main Rate (over £250,000): A solid 25%, where success tax kicks in.

3. Value Added Tax (VAT): A Cash Flow Game-Changer

VAT can significantly impact your production’s cash flow. Whether compulsory at £85,000 or voluntary, registering early can help reclaim VAT from suppliers. And here’s a bonus—while most businesses file VAT returns quarterly, going monthly can boost your production’s cash flow.

Reminder: If VAT-registered, add an extra 20% on invoices for UK customers.

4. Payroll Tax: Don’t Overlook the Details

Often pushed to the last minute, payroll tax is crucial for productions even those made up of contractors and self-employed workers. HMRC has tightened the screws on Schedule D workers. Check HMRC’s Appendix 1 before diving into contracts. This list highlights some the roles HMRC consider to be Freelane in Film and TV.

Tax Considerations:

  • PAYE: A deduction from the employee’s gross salary.
  • Employee National Insurance: Another cut into the employee’s gross salary.
  • Employers National Insurance: On production companies, a hefty 13.8% for the tax year 23/24. Good news—there’s an employers Tax allowance available on up to £5,000.

For Details: Head to the HMRC website.

5. Foreign Entertainer Unit (Withholding Tax): Navigate International Talent

When dealing with non-UK talent, withholding tax becomes crucial. Ensure you discuss this upfront when hashing out terms with foreign entertainers to avoid surprises. This deduction comes straight from the performer’s cost, not an extra tax for the production.

Heads Up: Failure to declare might lead to HMRC knocking on the production company’s door to cover the tax cost.

In Conclusion: A Quick Rundown on Key Taxes

This guide scratches the surface of the tax iceberg. For a deeper dive, consult an accountant. Remember, understanding these nuances can make taxes less taxing. Need more guidance? Reach out and drop Sam an email.

Happy producing!