High end television (HET) production companies and companies involved in animation are able to claim an enhanced deduction on qualifying expenditure provided a number of tests are met. Amongst these, is the requirement that at least 25% of the total production costs relate to activities in the UK and that the production is culturally British.
If the company makes a loss as a result of the enhancement this can be surrendered for a 25% tax credit.
The minimum UK expenditure requirement for HET tax relief will be reduced from 25% to 10% and the cultural test will be modernised, subject to state aid clearance. The reduction in the minimum UK expenditure requirement will apply to animation tax relief as well as HET tax relief.
These measures will apply to qualifying expenditure incurred on or after 1 April 2015, subject to state aid clearance.
These changes will allow more companies to claim HET tax relief, with only a small contribution from the UK. However, the production will still have to pass the revised cultural test.