Grant Thornton's Top Five Budget Predictions Impacting The Film
and Television Industry
Liz Brion, Media and Tax Partner at
Grant Thornton says: "It is unlikely that the Chancellor will
bring in significant tax rises apart from those already announced
as every vote will count in the run up to the election.
"Although there are likely to be small tax
breaks for those on low incomes we are unlikely to see tax changes
that would make a considerable impact on TV and film businesses,
particularly smaller firms."
1) HM Revenue & Customs (HMRC)
revisions to guidelines on tax status and expenses
for self-employed film and TV workers
The Budget might announce a revision to the
existing guidelines governing the tax status and expenses for
self-employed workers in the media sector. The proposed revisions
will see new roles, such as Digital Set Designer, added to the
self-employed list. It is also possible that pre-existing roles
will be removed from the guidelines, altering the corresponding tax
status.
2) Standstill on film tax relief
Media industries, such as animation and gaming, are hoping to
receive a similar tax relief to that given to the film industry,
but the Budget is likely to disappoint on this front. Hopefully
this will be addressed at some point in the near future, as it will
help enable the UK to compete internationally and encourage more
home-grown businesses and film productions to develop in the
UK.
3) No change to EIS reliefs
The Enterprise Investment Scheme (EIS), which offers a range of
tax reliefs to investors who subscribe for new shares in unlisted
trading companies, is still quite complex to the extent that many
would-be investors choose to go elsewhere. More flexibility is
needed to make this scheme work better as it could be a valuable
source of funding for the media sector. We would also welcome an
increase in the amount of tax relief to encourage investment, but
neither is likely to be touched on in the Budget.
Concern has already been expressed about changes to the
conditions for EIS which must be met by qualifying companies as
announced in the Pre-Budget Report last December. It would be good
to see if note has been taken on the representations made in this
area to step back from some of the more restrictive changes that
were proposed.
4) Corporation tax rate to remain the
same
It is unlikely that the corporation tax rate
(mainstream or small company rate) will change in this Budget. The
small companies' corporation tax rate, which many smaller, TV and
film companies currently pay, is expected to remain at 21% in this
Budget with the planned increase to 22% delayed until 2011/12.
5) Increased anti-avoidance
measures
To help close down aggressive tax planning and
raise revenue, we expect to see a number of targeted anti-avoidance
measures. These may include stringent requirements for tax
advisers, including those of film, TV and media companies in
general to inform HMRC of the activities of their clients. In
addition, HMRC has been looking at specific measures to target
'wrong doing' tax advisers although it is now expected that
specific legislation may not appear in the forthcoming Finance Bill
as more consultation is being sought.
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For further information, please contact:
Stephanie Aneto, Grant Thornton Press Office: on 020 7728 2940 or
stephanie.aneto@gtuk.com