Tag: tax relief

New tax credits for British film, TV and video game makers start today

  • New and improved tax credit system for film, TV and video game production companies starts from today
  • An extra £42,500 in relief for children’s TV, animated TV and animated film production
  • £5,000 in relief for high-end TV, film or video game production

British film, TV and video game producers will benefit from new, more generous tax credits that start today (1 January 2024).

To maximise the potential of the UK’s cutting-edge production industry and help incubate unique British talent, the government’s Audio-Visual Expenditure Credit and the Video Games Expenditure Credit replace the previous tax reliefs for film, TV and video games.

All companies will receive more tax relief than they did under the previous system, greater flexibility over production decisions and greater clarity about the amount of credit companies can expect to receive.

Nigel Huddleston, Financial Secretary to the Treasury, said: “We are backing the makers of the next Barbie, Happy Valley and Grand Theft Auto with this new, more generous, tax credit system for British production talent.

“The UK is a world leader in creativity, and we want to ensure that continues well into the future by making it easier for British film, TV and video games to thrive.”

Under the new system, a children’s TV production, animated TV production or film with £1 million of qualifying expenditure will receive an additional £42,500 in relief. A high-end TV production, film production or video game will receive £5,000 in relief. To ensure fairness, the uplift in relief for animation will be extended to include animated films as well as TV programmes.

The credits will be calculated directly from a production or game’s qualifying expenditure, instead of being an adjustment to the company’s taxable profit.

Animation and children’s TV productions will be eligible for a higher credit rate of 39%, a rate increase of 5.5% under the previous reliefs. The 34% credit rate for film, high end TV and video games is roughly equivalent to a rate increase of 0.5% under the previous tax reliefs.

The new system applies to the whole of the UK.

The government has listened to feedback from industry that companies will need sufficient time to adapt to the new expenditure credits. For this reason, productions and games in development on 1 April 2025 may continue to use the previous tax reliefs until they end on until 1 April 2027.

The move to reform tax relief for entertainment productions and video games was announced at the Spring Budget in March 2023. The system implemented today was developed hand in glove with the UK entertainment industry, with consultations on both the policy itself and the draft legislation. It is being legislated as part of the Finance Bill 2023-24.

The UK’s creative industry is already worth £126bn and the UK has the largest video game employee base in Europe, at nearly 21,000 by the last estimate.

Today’s new tax credit system is the latest move by UK Government in support for British creative industries. The Chancellor also announced that full-expensing will be made permanent in 2023’s Autumn Statement, helping creative businesses invest for the less by saving them 25p in every £1 they spend on qualifying equipment and machinery.

At Spring Budget 2023, the Chancellor also extended the rates of relief for theatre, orchestra and museums for two additional years to April 2025.

In September last year, coinciding with a visit by the Chancellor Jeremy Hunt to Warner Bros. Studios in Los Angeles, it was announced that the production giant would expand their studio in Leavesden, Hertfordshire, in 2024. The move is expected to create 4,000 new jobs in the UK and contribute more than £200m to the UK economy.

No frosty surprises when you claim tax relief directly with HMRC

Every penny counts at Christmas and employees eligible to claim a tax refund on any work-related expenses are being urged to do it directly through HM Revenue and Customs (HMRC) to guarantee receiving 100% of their claim.

Whether working in hospitality or retail, taking on a seasonal second job as a delivery driver, or even becoming Santa’s elf for the month, the most straightforward way to claim – and keep – all of a tax refund is through HMRC’s online service. A claim takes just 15 minutes.

Employees can use the online service to check eligibility and get a full list of work expenses they could claim a tax refund for, including: 

  • cleaning, replacing or repairing a uniform or work clothing
  • using their own vehicle for work including business mileage
  • professional subscriptions they’ve paid for, that are needed to do their job.

Suzanne Newton, HMRC’s Interim Director General for Transformation, said: “Christmas can be an expensive time of the year and for many, it could be a good opportunity to claim a tax refund on work expenses to boost finances.

“Latest figures show the average claim is £125 a year. But the only way to guarantee receiving 100% of your eligible refund is by claiming direct through HMRC. Just search ‘tax relief for expenses’ on GOV.UK to find out more.”

Once customers have signed into the HMRC service, they just need to follow the simple step-by-step guidance to submit their claim. Those who need to set up an account can do so quickly and easily via GOV.UK.

Customers considering using an agent to make their repayment claims are likely to be charged a fee – in some cases up to 50% of the value of the claim. If the claim is then found to be ineligible, customers are liable to pay back the full amount of the refund, not the amount they finally received, so could end up out of pocket.

While going through an agent may seem like a simpler option at first, customers will need to supply the agent with the same information they would use to make the claim themselves using HMRC’s free online service.

Anyone who does, nevertheless, choose to use an agent to make a claim on their behalf should also check the small print before signing a contract – including researching the company so they understand what commission is being charged and how much of their tax refund they are likely to receive back. 

More information about how to make a work-related expense claim and what type of expense can be claimed is available at GOV.UK. 

R&D Tax Relief Reform consultation

  • R&D tax relief reform set to simplify the system and help grow the economy
    Clearer information about how much relief business will receive to be offered up front, helping them budget for R&D
  • Follows £20 billion investment in R&D from government at Autumn Statement and the Chancellor’s pledge to understand how to provide further support for R&D intensive SMEs

The Government has launched a consultation to simplify the UK’s R&D tax relief system, drive innovation and grow the economy.

The 8-week consultation, which runs from 13 January to 13 March 2023, sets out proposals on how a single scheme could be designed and implemented. This would replace the two R&D tax relief schemes currently in place – the Research and Development Expenditure Credit (RDEC) and the small and medium enterprises (SME) R&D relief.

A scheme modelled on the current RDEC for SMEs would also give decision makers in smaller companies clearer information, which will help them set budgets for R&D. In contrast, for those claiming SME tax relief in the current setup, the exact amount of money their firm will receive can only be known with certainty at the end of accounting period.

This is part of the government’s ongoing R&D tax reliefs review, and follows changes announced at Autumn Statement 2022 where the generosities of the two R&D tax schemes were broadly aligned, with the Chancellor pledging to work with industry to understand how to provide further support for R&D intensive SMEs.

The UK’s R&D tax reliefs have an important role to play in encouraging more businesses to invest in R&D, helping them to grow and create the technologies, products and services which reshape lives and livelihoods.

Government spending on R&D plays a crucial role in stimulating private sector investment which is why it is increasing investment to £20 billion a year by 2024-25 – the largest ever increase in a Spending Review period.

Victoria Atkins MP, Financial Secretary to the Treasury, said: “We are focussed on growing the economy – with thriving businesses bringing more jobs, higher pay and more tax revenue to fund our precious public services.

“Getting R&D tax relief right and fit for the future sits at the heart of making sure the UK remains a competitive location for cutting edge research – helping new firms grow.

“I welcome views on the option to simplify the scheme, especially from those who have experience of the existing tax reliefs.”

The UK is unusual in having two schemes and moving to a single measure would simplify the R&D tax system in line with the government’s overall plans for tax simplification.

The government would like to hear from a wide range of sources including individuals, companies, representative and professional bodies, and especially invites comments from research and development intensive businesses and those representing them.

The government recognises the reform to the rates creates challenges for some R&D intensive SMEs and those in the life sciences sector in particular and believes there is merit to the case for further support. Any further changes will be announced in the usual way, at a future fiscal event.

If implemented, the new scheme is expected to be in place from 1 April 2024.

Charities missing out on over £940 million a year as a result of donors failing to claim tax relief

Generous donors are forgetting to claim personal tax relief which could boost charity funds

Hard-pressed charities could be missing out on more than £940 million a year, as generous donors fail to claim tax relief on the money they give, new research from Handelsbanken Wealth Management & Asset Management shows.

Charity Commission data shows 60% of organisations have suffered a drop in income during the pandemic.

Handelsbanken Wealth Management & Asset Management’s nationwide study found 60% of charity supporters are not claiming tax relief on donations distinct from money given directly through their salary. Their donations are estimated to be worth around £4,7 billion and with 20% tax relief would yield more than £940 million for charities.

Just 9.5 million people are claiming tax relief on donations, with 29% doing so through Gift Aid on their self-assessment tax form, while 10% do so by asking HMRC to amend their tax code and 2% use a financial planner.

Handelsbanken Wealth Management & Asset Management research highlights the importance of getting advice on making charitable giving more tax efficient – for both good causes and donors themselves. Just 59% of adults are aware they can claim personal tax relief on any charitable donations they make.

Its study shows people willing to be very generous in their backing of good causes – 22% are definitely planning on leaving money to good causes in their will, with an average donation of more than £2,200 planned adding up to a potential pay-out for charities of £26.5 billion.

Across the country, more than two out of three adults (68%) donate to charities every year – the equivalent of around 35.9 million people. The average donation is £499, equating to a total of £17.9 billion donated every year overall – or £563.62 every minute. Young people (18-34) donate more than twice the average (£1,056) while older people (55+) donate a quarter of that (£250). Londoners donate an average of £1,546 per year – more than three times the UK average.

But Handelsbanken Wealth Management & Asset Management’s research shows knowledge of tax rules on donations to charity could be better – for instance, someone leaving 10% of their estate to charity would see the Inheritance Tax on the value of estates above the IHT threshold reduced from 40% to 36%.

However, less than one in five (18%) are aware of the rule even though 23% said they would consider doing so. The number of people aware of the rule only rises slightly among those with an estate worth more than £325,000 (22%).

The average value of an estate worth more than the IHT nil-rate band (£325,000) is £619,726. However, as things stand, only 12% of those with an estate worth more than £325,000 are currently planning on donating 10% or more to charity – some 422,000 people. These individuals could be set to save a total of £22,582 on their IHT bill by reducing their taxable rate – a total of £77.5 billion across the UK.

Mark Collins, Head of Tax at Handelsbanken Wealth Management & Asset Management said: “In common with many other sectors, charities have suffered during the pandemic, with fundraising badly affected and the Charity Commission estimating 60% of organisations have seen incomes suffer.

“Charity donors will want to see the organisations they support receiving the full benefit of donations, which should include claiming the tax relief whether it is through Gift Aid, or consulting a financial planner.

“Wealth advisers can guide people through how to maximise their donations, so they are effective for charities and their own IHT planning. Giving as much as 10% of your estate to charity can reduce IHT rates from 40% to 36% which would be very much welcomed by charities and potentially better reflect people’s wishes.”

The table below shows the numbers of people who fail to claim tax relief on charitable donations they make across the country with 73% of people in the North West and 72% in Yorkshire & The Humber not claiming.

Londoners are the best at claiming tax relief, but 31% are still not doing so.

REGIONHOW MANY DON’T CLAIM TAX RELIEF ON CHARITABLE DONATIONS THEY MAKE
North West73%
Yorkshire & The Humber72%
East of England68%
East Midlands67%
Wales65%
Scotland64%
North East63%
South East63%
South West61%
West Midlands55%
Northern Ireland51%
London31%
UK60%

1.8 million couples benefitting from extra tax relief

Nearly 1.8 million married couples and those in civil partnerships are using Marriage Allowance to save up to £252 a year in Income Tax, HM Revenue and Customs (HMRC) has announced.

Summer has always been a popular season for weddings, and newly married couples or those in civil partnerships could be eligible for the tax saving. And even if they have been married for years, a change in circumstances could also mean they are newly eligible.

Marriage Allowance allows married couples or those in civil partnerships to share their personal tax allowances if one partner earns an income under their Personal Allowance threshold of £12,570 and the other is a starter, basic or intermediate rate taxpayer.

They can transfer 10% of their tax-free allowance to their partner, which is £1,260 in 2021/22. It means couples can reduce the tax they pay by up to £252 a year. Couples can backdate their claims for any of the four previous tax years, which could be worth up to a total of £1,220.

It is free to apply for Marriage Allowance and the easiest way for taxpayers to check eligibility and make a claim to receive 100% of the relief they are entitled to is via GOV.UK.

Angela MacDonald, HMRC’s Deputy Chief Executive and Second Permanent Secretary, said: “Marriage Allowance lets eligible couples share their Personal Allowances and reduce their tax by up to £252 a year.

“Nearly 1.8 million couples are already using the service – it is free, quick and easy to apply, just search ‘marriage allowance’ on GOV.UK.”

Married couples may have experienced a change in their circumstances which could now mean they are eligible for Marriage Allowance, including:

·         A recent marriage or civil partnership

·         One partner has retired and the other remains working

·         A change in employment due to COVID-19

·         A reduction in working hours which means their earnings fall below their Personal Allowance

·         Unpaid leave or a career break, or

·         One partner is studying or in education and not earning above their Personal Allowance

If a spouse or civil partner has died since 5 April 2017, the surviving person can still claim by contacting the Income Tax helpline.

Marriage Allowance claims are automatically renewed every year. However, couples should notify HMRC if their circumstances change.

HMRC: 800,000 tax relief claims for working from home

Since April, almost 800,000 employees who have been working from home during the pandemic, have already claimed tax relief on household related costs, HM Revenue and Customs (HMRC) has revealed.

The saving is worth up to £128 per year for each employee in Scotland and eligible workers can claim the full year’s entitlement if they have been told to work from home by their employer, even if it has been for one day during the tax year.

Employees who have either returned to working in an office since early April or are preparing for their return can still claim the working from home tax relief and benefit from the full year’s relief for 2021/22.

It is quick and easy to claim via HMRC’s online portal. Employees can apply directly themselves and receive the full tax relief that is due. Once their application has been approved, their tax code will be automatically adjusted for the 2021/22 tax year, receiving the tax relief directly through their salary. Agents cannot use the online portal to apply on a customer’s behalf.

Myrtle Lloyd, HMRC’s Director General for Customer Services, said: “More people are getting back to office working now, but it’s not too late to apply for tax relief on household expenses if they’ve been working from home during the pandemic.

“It’s quick and easy to check if you’re eligible and apply online – go to GOV.UK and search ‘working from home tax relief’.”

Since April last year, the maximum amount employers have been able to pay tax-free without employees having to provide evidence of an increased bill was set at £6 a week. Employees who have not received the working from home expenses payment direct from their employer can apply to receive the tax relief from HMRC.

Eligible customers can claim tax relief based on the rate at which they pay tax. For example, if an employed worker pays the 21% intermediate rate of tax and claims tax relief on £6 a week, they would receive £1.26 a week in tax relief (21% of £6 a week) towards the cost of their household bills.

Higher rate taxpayers would receive £2.46 a week (41% of £6 a week). Over the course of the year, this means customers can reduce the tax they pay by £65.52 or £127.92 respectively.

If employees were required to work from home in the 2020/21 tax year but did not claim for the tax relief, they have not missed out; HMRC will accept backdated claims for up to four years. They will receive a lump sum payment for any successful backdated claims.

Working from home? Scots may be eligible to claim tax relief

HM Revenue and Customs (HMRC) is accepting tax relief claims for working from home due to coronavirus during 2021/22. More than 550,000 employed workers have already claimed and are benefitting from the tax relief.

If employed workers were told to work at home by their employer because of coronavirus and, as a result, their household costs have increased, they are eligible to claim the working from home tax relief. It is quick and easy to claim via HMRC’s online portal.

HMRC received more than three million claims across the UK for the tax relief for the 2020/21 tax year.

Myrtle Lloyd, HMRC’s Director General for Customer Services, said: “Half a million people have already reduced their Income Tax this year by up to £125, by claiming tax relief on their working from home expenses.

“We want everyone who’s eligible to benefit, so we’ve made it quick and easy to do online. Check if you’re eligible and apply at GOV.UK by searching ‘working from home tax relief’.

“HMRC is continuing to help and support people affected by the pandemic.”

From 6 April 2020, the amount employers have been able to pay tax-free without employees having to provide evidence of an increased bill is up to £6 a week.

Employees who have not received the working from home expenses payment direct from their employer can apply to receive the tax relief from HMRC.

Eligible customers can claim tax relief based on the rate at which they pay tax. For example, if an employed worker in Scotland pays the 21% intermediate rate of tax and claims tax relief on £6 a week, they would receive £1.26 a week in tax relief (21% of £6 a week) towards the cost of their household bills.

Higher rate taxpayers would therefore receive £2.46 a week (41% of £6 a week). Over the course of the year, this could mean customers can reduce the tax they pay by £65.52 or £127.92 respectively.

Taxpayers can check if they are eligible via GOV.UK.

To claim for tax relief for working from home, employees can apply directly via GOV.UK for free. Once their application has been approved, the online portal will adjust their tax code for the 2021/22 tax year. They will receive the tax relief directly through their salary until March 2022.

If employees were required to work from home last year but did not claim for the tax relief, they have not missed out; HMRC will accept backdated claims for up to four years. They will receive a lump sum payment for any successful backdated claims.

Using an agent to apply for the working from home tax relief, and other similar schemes, could result in customers paying unnecessary fees or commission.

Using the GOV.UK service is free, and customers will receive 100% of the tax relief that is due. Agents will not be able to use the online portal to apply for the relief on a customer’s behalf.