Enhanced tax credit for British films

The government promised a new enhanced audio-visual expenditure credit that will apply to films with a budget of less than £15m and that meet the British film institute test. Qualifying film production expenditure will attract a tax credit of 53%. Productions can make claims from 1 April 2025, in respect of expenditure incurred from 1 April 2024 onwards, provided that films started principal photography from 1 April 2024.

Extra tax relief for visual effects 

The Chancellor also confirmed that the tax credit rate for visual effects costs in film and high-end TV will be increased by 5% to 39% from April 2025, and the 80% cap will be removed for qualifying expenditure for visual effects costs. The government will consult further on the implementation of this measure. However, it is not yet clear on what date this will be enacted.

Tax reliefs for theatres, orchestras and exhibitions

During the COVID pandemic the government temporarily increased the headline rates of these reliefs to support businesses. From 1 April 2025 however, these rates will be made permanent, set at 40% for non-touring productions and 45% for touring productions and all orchestra productions. The sunset clause for museums and galleries exhibitions tax relief will also be removed.

The Tax Faculty will continue to work closely with the Treasury on changes in this area.

Business rates cut for film studios

In his speech, the Chancellor explained how studio space in the UK had developed rapidly and he wanted to support this growth with a 40% relief on gross business rates for film studios until 2034. This measure will be implemented as soon as possible and will be backdated from 1 April 2024.

Extension of full expensing to leased assets

Expenditure on plant and machinery used for leasing is excluded from the 100% first-year allowance (FYA), referred to as full-expensing, and the 50% FYA for special rate expenditure. The government is considering extending the 100% and 50% FYAs to leased assets and will publish draft legislation for technical consultation shortly.

Extension of sunset dates for freeport and investment zone tax reliefs

The government will extend the sunset dates for the tax reliefs in special tax sites to 30 September 2031 for English freeports and investment zones, and to 30 September 2034 for Scottish green freeports and Welsh freeports. 

Consultation of CARF and CRS

The government has published a consultation on:

• the UK’s implementation of the OECD’s Cryptoasset Reporting Framework (CARF) and the government’s approach to its optional elements. The CARF provides a new framework for automatic exchange of tax-relevant information on transactions in cryptoassets; and
• the UK’s implementation of the OECD’s amendments to the Common Reporting Standard (CRS). The amendments update the rules to include new types of assets and to improve its operation. 

Responses are required by 29 May 2024. If you would like to contribute to a response from ICAEW, please contact taxfac@icaew.com.