Autumn Statement – Chancellor proclaims “golden age” for British creative industries

Chancellor George Osborne has said that tax breaks have brought about a “golden age for Britain’s creative industries” as he announced new financial measures in his Autumn Statement.


Source: altogetherfool

Osborne announced that the theatre tax relief scheme, which came into effect earlier this year, is being extended to orchestras. He also announced new children’s animation tax credits.

Earlier this year, Osborne announced a VAT cut for the Design Museum, which means it will be able to open its doors for free when it moves to its new site at South Kensington in 2016.

Speaking to Design Week at the time of the Design Museum announcement, Osborne said of the design industry: “It’s a very diverse sector with diverse issues – there isn’t a single instrument you can use to tackle them.

“We’ve been able to support design and the creative industries through various mechanisms such as tax credits and initiatives such as this one with the Design Museum. We also want to make sure that design is a part of the learning environment – we want to recognise that Britain has a particular talent for design.”

Other new measures introduced by Osborne at the Autumn Statement include the doubling of small business rate relief and the extension of R&D credit to 230 per cent for small businesses.

The funding for lending scheme is being extended for a year, and there is also a £45 million scheme to support first-time exporters.

Osborne also outlined his vision for a “Northern powerhouse”, saying that a tender was out for new carriages for the Trans-Pennine Express and for Northern Rail.

He said that Manchester was to be home to a major new theatre space. Osborne said: “It will be called The Factory, Manchester. Anyone who’s a child of the 1980s will support that.”

According to reports the Factory will be a new £78 million artist-led media space, which will open in 2019 on the old Granada TV site. It will provide a permanent home for the Manchester International Festival.

• Reaction from Mike Hayes, tax partner at accountant KingstonSmithW1: 

“The Autumn Statement contains some good news for businesses in the creative sector, and one or two items that are less welcome.

Firstly the not so good news.

Many businesses in the creative sector have been operated as LLPs, some as partnerships. Corporation tax rates for companies have fallen and many businesses in this sector are looking to transfer their businesses to companies to save tax.

In recent times, a useful tax planning mechanism has been to sell the goodwill of the business at market value and claim entrepreneurs’ relief. This means that tax is paid at 10 per cent and the owners then draw down on the outstanding purchase consideration and take smaller salaries; this saves income tax and NICs.

The Chancellor has announced that, effective from today, entrepreneurs’ relief will not be available for such transactions. In addition, the purchasing company will be denied a corporation tax deduction for writing down the goodwill in its books.  This change will come as shock for many design entrepreneurs, especially those who are part way through such a process.

On the positive side, there are some pieces of very good news, including:

• Enhanced research and development tax credits from April 2015 for both small and large companies;

• A new corporation tax relief for the production of children’s television programmes will be introduced from 1 April 2015. The relief will be available at a rate of 25 per cent on qualifying production expenditure;

• An announcement of a consultation on the introduction of an orchestra corporation tax relief from 1 April 2016. Presumably this will be similar to the new theatre tax relief;

• Potential improvements to high‐end television tax relief.

Overall, the Chancellor has favoured creative and tech businesses through the tax system and this Autumn Statement has seen him continue in that approach. However, he recognises that this is not at the expense of overlooking what he perceives as abuses of the tax system, hence the change to entrepreneurs’ relief.”

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  • Simon Dunant November 30, -0001 at 12:00 am

    Whilst on the flip side of the coin George Osbourne clearly has missed the VAT Moss fiasco. The new EU Tax laws imposed Jan 1st are going to stifle the creative industries not help them flourish.

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