5 Mins
Cultural Tax Reliefs
Museums & Galleries Exhibition Tax Relief (MGETR) has been extended to 31 March 2026 (having previously been due to expire 31 March 2024) and the rates for MGETR, Theatre Tax Relief (TTR) and Orchestra Tax Relief (OTR) will remain at increased rates for a further two years.
The rates for TTR and MGETR, which were due to reduce to 30% (for non-touring productions) and 35% (for touring productions) on 1 April 2023, will remain at 45% and 50% respectively until 31 March 2025. This is equivalent to 36p or 40p per £1 spent on qualifying costs. From 1 April 2025, the rates will be 30% and 35% (equivalent to 24p and 28p per £1 respectively) will return to 20% and 25% on 1 April 2026 for TTR (equivalent to 16p and 20p per £1).
The rates for OTR will remain at 50% for expenditure taking place from 1 April 2023 (equivalent to 40p per £1), reducing to 35% from 1 April 2025 (equivalent to 28p per £1) and returning to 25% from 1 April 2026 (equivalent to 20p per £1).
On a less positive note, the guidance released suggests MGETR will expire after 31 March 2026 and no expenditure after this date will be eligible for relief. The legislation has always had a ‘sunset clause’ but the guidance released at previous budgets only commented that it has been extended rather than stating explicitly that it will expire – but we are hopeful future budgets will extend the relief again or make it permanent.
Qualifying expenditure for the purpose of the relief will be changed to ‘expenditure on goods and services that are used or consumed in the UK.’ The aim of this is to align the cultural reliefs with the audio-visual reliefs (video games/films etc) and ensure these reliefs remain compliant with the UK’s international obligations. It is noted that productions that have not concluded by 1 April 2024 may continue to claim EEA (EU countries plus Iceland, Liechtenstein and Norway) expenditure until 31 March 2025.
Reform of Video Games Tax Relief – Spring Budget Update
Following a 12-week consultation, Chancellor Jeremy Hunt has announced some major changes to the Video Games Tax Relief (And other creative industries) in the UK. Some of the changes are as follows:
- Replacing ‘Video Games Tax Relief’ with a new ‘Video Games Expenditure Credit’ (Similar to the current Research & Development Expenditure Credit)
- The new credit will have a rate of relief of 34% on 80% of qualifying expenditure (A small improvement on current rates)
- Companies may claim expenditure credits from accounting periods on or after 1 January 2024
- Companies must claim expenditure credits on new games in development from 1 April 2025
- EEA expenditure will be excluded from the qualifying costs
- A minimum of 10% of expenditure will be required to be incurred on ‘goods or services used or consumed in the UK’
- There will no longer be a subcontractor cap (Previously £1m per game)
- Draft legislation is scheduled to be published in Summer 2023 at which time the government will ask for feedback on the new proposals.
R&D Update – Spring Budget 2023
Over the past year, there have been many changes announced to the R&D tax regime in the UK including the following:
- Reduction in the rates of SME R&D tax relief:
- Enhanced deduction for qualifying R&D spend reducing from 130% to 86%
- Tax credit for loss-making companies reducing from 14.5% to 10%
- Increase of the RDEC rate from 13% to 20% (Thus nearly aligning the benefit of the two regimes)
- Refocusing R&D work to be undertaken in the UK
- New administrative requirements
The Spring Budget included several additional announcements further to the above.
Firstly, R&D-intensive companies (those whose R&D expenditure is more than 40% of their total expenditure) will still be able to claim a tax credit at 14.5% if they are loss-making. This means those companies can claim back £27 for every £100 of qualifying R&D spend. While this is not quite as good as the £33.50 currently on offer, it’s much better than the £18.60 which was announced in autumn.
There has also been a delay to the implementation of the overseas expenditure restriction by 12 months, meaning it only affects claims for accounting periods beginning on or after 1 April 2024. For a company with a December year-end, this restriction won’t impact the company until your December 2025 R&D claim!
Finally, the compulsory ‘Additional Information’ form will now be required for all R&D claims made on or after 1 August 2023. There has still been no guidance released on this despite it previously being announced it would be live from 1 April 2023.
Taxpayers liable for ATED must revalue property
ATED is an annual tax payable mainly by companies that own UK residential property valued at more than £500,000. This can include properties owned completely or partly by a company, partnerships where any of the partners is a company, and collective investment schemes such as a unit trust or an open-ended investment vehicle.
Chargeable amounts from 1 April 2023 to 31 March 2024
| Property Value | Annual Charge |
| £500,000 up to £1m | £4,150 |
| £1m up to £2m | £8,450 |
| £2m up to £5m | £28,650 |
| £5m up to £10m | £67,050 |
| £10m up to £20m | £134,550 |
| £20m | £269,450 |
However, not all high-valued dwellings are subject to the charge. There are numerous exemptions which include:
- residential properties open to the public for at least 28 days a year on a commercial basis;
- property development, investment, rental and trading businesses;
- residential properties held for employee accommodation;
- working farmhouses;
- residential properties owned by a charity and held for charitable purposes;
- properties owned by providers of social housing;
- diplomatic properties; and
- some other publicly owned residential properties.
Crucially, properties within the charge to ATED must be revalued every five years in line with the legislation. The next assessable period is a revaluation year which means that companies must use the valuation date of 1 April 2022 or the date of acquisition if later, to revalue their properties for the 2023/24 ATED return which is due to be submitted by 30 April 2024.
Capital Allowances – Full Expensing (Plant and Machinery)
Companies purchasing qualifying plant and machinery (P&M) can currently claim enhanced allowances, the ‘super deduction’ 130% relief on new and unused main pool items and the 50% first year allowances (FYAs) on new and unused special rate items. However, this enhanced allowance, brought in to boost the level of business investment following the pandemic, will end on the 31 March 2023.
To continue to incentivise companies to invest in the UK, from 1 April 2023 until 31 March 2026 companies can claim:
- 100% full expensing on qualifying P&M (new and unused)
- 50% FYA on qualifying special rate expenditure (new and unused)
- 100% FYA Annual Investment Allowance (AIA) up to £1m on certain assets that do not qualify for full expensing or the 50% FYA on special rate expenditure.
- 18% main rate allowances or 6% special rate allowances for qualifying expenditure that is not covered by the above.
Cars are excluded from full expensing, 50% FYA and AIA. However low emission (<50g/km) cars can claim main rate allowances (currently 18%); any cars with higher emissions can claim 6% special rate allowances, while electric cars can claim up to 100% FYA if new and unused. For these purposes, vans are classed as P&M and are therefore eligible for full expensing.
As the main rate of corporation tax is increasing to 25% from 1 April 2023, the above capital allowances represent potential savings of 25p for every £1 of qualifying expenditure. For companies that are within the marginal rates of tax, the saving could be up to 26.25p per £1.
It is important to note that any assets acquired under a finance lease are excluded from the above reliefs; and that any assets under hire purchase contracts need to be brought into use to be eligible for capital allowances.