Children’s Television Tax Relief 

How much can you claim?

Qualifying companies can claim an additional deduction on their Corporation Tax Return which will reduce their profits or increase any loss thereby reducing their Corporation Tax liability. As an alternative they can surrender a loss in return for a repayable tax credit.

The additional deduction will be the lower of:

• 80% of the total core expenditure
• the amount of UK core expenditure

Essentially, core expenditure is expenditure incurred on pre-production, principal photography and post-production. It excludes expenditure on development, distribution or other nonproduction activities.

If the company is shown to make a loss after applying the additional deduction on it’s Corporation Tax Return, all or part of the loss can be surrendered in return for a repayable tax credit at a rate of 25%.

The claim should be made within one year of the company’s filing date and can be amended or withdrawn within that period.

Working examples for Children’s Television Tax Relief

A television production company produces several episodes of a children’s game show with nominal prizes. It generates income of £1m in their current financial year and as part of producing the game show it has a total costs of £800,000.

Of the £800,000 in costs during the financial year it has qualifying core expenditure of £400,000(1) .

Of the same £800,000 in costs during the financial year it has qualifying core expenditure of £300,000(2) which was spent within the UK.

Corporation Tax filing would be as follows if Children’s Television Tax Relief was not applied:

Income: £1,000,000

Expenditure: £ 800,000

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Profit/Loss: £ 200,000

Corporation Tax Liability: £ 38,000

(£200,000 x 19%)

Corporation Tax filing would be as follows if Children’s Television Tax Relief was applied:

Income: £1,000,000

Expenditure: £ 800,000

Additional Deduction: £ 300,000

(lesser of (1) 80% of £400,000 and (2) £300,000)

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Profit/Loss: £ (100,000)

Repayable Tax Credit: £ 25,000

(£100,000 x 25%)

As the production company made a loss of £100,000 after applying the additional deduction permitted under Children’s Television Tax Relief it would not pay any Corporation Tax, but would receive a repayable tax credit of £25,000. A difference of £63,000 which they could potentially invest in other projects.