Children’s Television Tax Relief

There is a list of excluded programmes. If your programme falls into one of these categories, it does not qualify for Children’s Television Tax Relief:

• Advertisements or other promotional material;
• News or current affairs programmes or discussion programmes;
• Any panel show, variety show, chat show or similar entertainment;
• A children’s programme consisting of or including a competition or contest for which the total prizes exceed a value of £1,000 (this limit applies to a series of programmes commissioned together);
• Any broadcast of live events or theatrical or artistic performance given otherwise than to be filmed;
• Any programme produced for training purposes.

All productions must be certified as British. For the vast majority of cases, this means passing the Cultural Test as administered by the British Film Institute (BFI).

The only exception to this rule is for co-productions.

Under the Children’s Television Tax Relief definition, a co-production is a programme produced under the terms of an international co-production agreement between two or more countries or authorities.

In the UK, such programmes are made under:

• A bilateral co-production treaty, or
• The European Convention on Cinematic Co-production.

Qualifying co-productions can be considered ‘British’ under a different definition; they must have a minimum of 10% of the total core costs (across all partners) in the UK, but do not need to pass the BFI's Cultural Test.

The advantage of a programme being made as an official co-production is that each producer can access the support within their respective countries, including tax relief where available.

In most cases, your production must be certified as British by passing the British Film Institute’s (BFI) cultural test.

To pass the BFI cultural test, complete an online application form for each production for which you want to claim ATR. BFI will assess your application and award points based on the cultural content of the production, its cultural contribution, its cultural hubs, and its cultural practitioners.

You will need to achieve 16 of a possible 31 points to pass.

Myriad employs BFI application specialists who can help you pass this test. Contact us for advice. 

BFI is currently reporting 8-10 weeks to process submitted applications.

Delays may occur if application forms are not correctly completed or need further information. If you need the certificate by a specific date, make sure you apply in good time and specify your deadline date on the application.

A Letter of Comfort: If you’re not yet ready to complete a cultural test application, you can submit a draft application and receive a Letter of Comfort from the BFI. This letter will state that the production should pass the cultural test. A Letter of Comfort can’t be used to submit an ATR claim to HMRC, but it is reassuring to have and can help you secure financing.

An Interim Certificate: You can apply for an Interim Certificate if your production is not yet finished. An Interim Certificate will be issued once the BFI and the Department of Culture, Media and Sport (DCMS) are satisfied that your production will pass the cultural test based on the proposals set out in your application.

A Final Certificate: A final certificate proving your production is British will only be issued after it is finished and ready for release. Therefore, applications for a final certificate should not be submitted before the production has been completed. 

The Accountant's Report is required when an application claims points in Section C and/or Section D in the BFI Cultural Test.

The Accountant's report aims to verify the total and UK expenditure of the work in Section C and the nationality or residence of all persons in Section D. 

The Accountant's Report must be prepared by a person eligible for appointment as a company auditor under section 1212 of the Companies Act 2006.

A report can cost between £500 and £2,000 per application, depending on the production costs and the number of applications you submit.

The BFI cultural test regulations require you to make a statutory declaration which states that the information you’ve given in your application is accurate.

A statutory declaration is required for both the Interim and Final certifications. 

The statutory declaration must be made before a practising solicitor, general notary, Justice of the Peace or an officer authorised by law to administer a statutory declaration under the Statutory Declaration Act 1835.

Each production must be treated as a separate trade for tax purposes, so you’ll need to create a profit and loss account for each production to report to HMRC. A company makes this election in its tax return by accounting for the production as a separate trade in its Corporation Tax computations.

TV programmes commissioned together are treated as one programme.

There are four phases of development in a production:

• Development
• Pre-production
• Principal photography
• Post-production

Activity between development and commercialisation are (largely) eligible core costs.

The key to when core costs can be claimed is knowing when the project was “green-lit”. Development activity is usually undertaken to determine whether the production is commercially feasible. Any expenditure in this stage is speculative in nature. 

Expenditure can be claimed once it is clear that the production will go ahead. Some production companies may have done very little conceptual development before production, and some may have spent more time assessing its commercial viability.

Commercialisation activities are no longer eligible, even though they may be crucial to a production's success; they are activities following when a production could be released to the public.

Non-core expenditure relates to initial design stage activities or commercial exploitation of the children’s television programme.

For example, initial concept artwork used as part of the process of establishing commercial viability is not a core expenditure and is not eligible for CTTR.  Marketing a children’s television programme isn’t classed as a development expenditure and, therefore, is not a core expenditure.

Ineligible expenditures include entertaining, publicity, promotion, audit fees, interest, completion bonds and other forms of insurance.

The amount of Children’s Television Tax Relief (CTTR) to which a Television Production Company (TPC) is entitled is determined by the amount of core expenditure related to activity undertaken in the UK.

Where a television programme is partly produced in the UK and partly outside of the UK, it will follow that some goods and services may be non-UK. In such cases, it will be necessary to apportion the relevant core expenditure between UK and non-UK expenditure. This applies to goods and services provided throughout core expenditure stages.

The apportionment method is not fixed and can be determined on a case-by-case basis. The key criterion is that it must be done on a fair and reasonable basis. There will often be more than one ‘fair and reasonable’ basis.

Contact the CTTR team today.