Why
Now
With broadcasters’ budgets squeezed, longer waiting times for greenlights, and increasingly more expected of producers as part of the development process, a tax credit would enable production companies to get something back on their time and financial investment. Crucially, this could help to ease some of the direct pressures production businesses are under in the current, challenging climate.
The UK has historically been a global leader in producing innovative television formats which have gone on to sell around the world, but that status is under threat. Strong competition from countries like France, Brazil, Denmark and Korea – where governments have already introduced similar tax credits to support their production sectors – make it even more pressing for the UK Government to act.
How it
Could Work
The Government already runs the UK Research and Development Expenditure Credit (RDEC), a tax incentive designed to support companies that work on innovative projects in science and technology.
Pact would like to see a broader interpretation of qualifying R&D activity within the creative R&D tax credit and for it to apply across all TV and film genres.
A barrier to proposals in the past has been the challenge of defining which expenditure should count toward it. We are very open to working with the Government to clearly define qualifying expenditure. For example, there are areas of development spend that companies already audit, such as:
- costs directly related to acquiring and developing the creative IP (i.e. writers’ fees and rights purchase fees)
- third party specialist services needed to structure and package the project (i.e. legal fees, accounting fees, co-production structuring advice)
- third party production planning and packaging costs incurred to make the project production ready and commercially attractive
A broader interpretation of qualifying R&D activity, reflecting activity undertaken within the creative industries including TV and film would allow producers to claim against these costs and aid future growth in the sector.
Next
Steps
We will be making the case for a creative R&D tax credit in our discussions with Government and officials whenever possible, including during the upcoming party conference season.
We will also be working with key industry stakeholders for support on the proposal and will keep Pact members informed about how to get involved in future activities to help strengthen the case we are making to Government.
A creative R&D tax credit is just one of a number of policy issues that Pact is actively engaged in on behalf of independent producers across the UK. The top priority is currently the BBC Charter Review and the imperative to find a sustainable future funding model for the broadcaster.
For any enquiries on the creative R&D tax credit proposal, or any of Pact’s other Policy work, please contact our Policy Assistant, Lisa Tesfai: lisa@pact.co.uk.
You can also find out more about our lobbying and campaign priorities here.