Creative Tax Incentives Reflect the Market Trends Fuelling the UK's Growth as a Creative Hub

The annual Creative Industries Statistics Commentary has recently been released, covering the various ‘Tax Reliefs’ up to March 2023 (remember that companies have 12 months to make a claim, so that there is a lag in accurate data until all claims have been filed). The impact of the shift towards On-Demand TV and increased percentage rates available to ‘live’ events (Theatre, Orchestra etc) appear to be the main drivers in the various trends. This very much reflects what we at Nyman Libson Paul are witnessing, with our broad involvement across the Creative Sectors and the various Tax Credits on offer.

In respect of the 2022/23 period, £2.2 billion was paid out (up from £1.9bn) with the overall increase particularly attributable to increased rates for Theatre Claims and an increase in High End Television Productions.

The most claims were made for Theatre Productions (3,980 projects, £178m paid), but many are for smaller amounts reflecting claims by smaller productions. Although Theatre Tax Credit claims were, naturally, severely affected by COVID, the increase in the amounts claimed is quite phenomenal due to the increase in rates available. Nevertheless, the number of claims is also above pre-COVID levels too. Orchestra Tax Credits (400 projects, £33m paid). depict a similar scenario, as do Museums and Galleries Exhibitions (2,755 projects, £29m paid).

But it is High End TV that tops the payout amounts (505 projects, £1,107m paid) with Film in second place (815 projects, £553m paid). If one adds in Animations and Children’s TV, the overall number of screen productions collectively accounted for only 16.1% of projects whilst receiving a huge 76.6% of payouts (1,470 project, £1,713m paid).

Of course, to claim a High End TV Tax Credit the production’s budget must be at least £1m per hour, so the vast majority of TV Shows are not eligible and the amounts claimed will be high in respect of those that are eligible to claim. In contrast, Theatre Productions may make large claims for big productions, but many smaller theatres host relatively lower budget productions whose claims may be numerous but don’t match the larger expenditure on big ‘spectaculars’. Unlike High End TV, small productions can claim.

If there is one sector that is probably going through some uncertain times, it is film. Naturally, a lot of filmmakers have moved over to TV production as ‘On-Demand’ TV and Streaming continues to displace visiting cinemas in the way consumers behave. Increasingly, cinema chains rely on blockbusters and distribution for Independent Film remains an industry concern. The value and number of Film Tax Credit claims are currently below pre-COVID levels whilst the value of High End TV claims is up 13% on the previous year.

The more ‘niche’ claims for Animations (85 projects,£26m paid) and Children’s TV (65 projects, £27m paid) remain steady.

With regard to Video Games (485 projects (5.3%), £282m paid (12.6%), there is a steady increase, as has been seen in previous years. The payouts increased 10%, year on year, which is in line with growth since the incentive’s inception in 2014-15.

This article was written by Dave Morrison and Anthony Pins.