APC55030 - Calculation: rates of relief

S1216CG, S 1216CI Corporation Tax Act 2009

Where a Television Production Company (TPC) is entitled to claim Television Tax Relief (TTR) in respect of enhanceable expenditure (APC55020), the rates of both the enhancement and any payable credit (APC55100) are as follows:

  • Rate of enhancement equals 100%
  • Payable credit rate equals 25%

Unlike Film Tax Relief (FTR), the rate of enhancement is not varied according to the size of the budget for the production. The rate is always 100%.

TTR will be most valuable where the animation trade is loss-making and the TPC surrenders the additional deduction for a payable tax credit.

The calcualtions below show the value of the TTR assuming in each case that:

  • at least 80% of the total core expenditure is UK core expenditure, and
  • the rate of Corporation Tax is 23%.

TPC with sufficient taxable profits to absorb all of additional deduction

  • Enhanceable expenditure = 80% of total expenditure
  • Value of TTR
  • = 80% x 23%
  • = 18.4%

TPC has no taxable profits and claims maximum amount of payable credit

  • Enhanceable expenditure = 80% of total expenditure
  • Payable credit rate = 25%
  • Value of Television Tax Credit:
    • = 80% x 25%
    • = 20%

This means that there is both a timing benefit and an overall financial benefit to surrendering losses for a payable tax credit.

The anti-avoidance provisions for TTR prevent a company artificially inflating production costs in order to increase relief or a payable credit (APC80040). These provisions will also apply to the situation where income is not recognised or deferred to increase the surrenderable loss.