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Clause 33 - Television tax relief: activities to be treated as separate trade

Finance (No. 2) Bill – in a Public Bill Committee at 5:15 pm on 6th May 2014.

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Question proposed, That the clause stand part of the Bill.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

It is a pleasure to serve under your chairmanship this afternoon, Mr Caton. May I ask permission to deal with clauses 33 and 34 together?

Photo of Martin Caton Martin Caton Labour, Gower

An amendment has been tabled to clause 34, so it will be more straightforward to deal with clause 33 separately.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

Thank you, Mr Caton. Clause 33 relates to other tax reliefs for the creative industries, based, as we have discussed, on Labour’s highly successful film tax relief. The Finance Act 2013 introduced a new tax relief for the production of high-end television animation, as well as for video games development, allowing companies engaged in the production of qualifying high-end television productions

“to claim an additional deduction in computing their taxable profits and where that additional deduction results in a loss, to surrender those losses for a payable tax credit.”

It is of course welcome that the Government recognise the incredibly important role that the creative industries play. As the tax information and impact note on the measures in last year’s Finance Bill made clear, high-end television animation and video games tax reliefs are all based on Labour’s successful film tax relief.

Sections 1216A and 1216B of part 15A of the Corporation Tax Act 2009 specify that a specific programme or production eligible for tax relief is treated as a separate trade to the rest of the company. Clause 33 therefore seeks to clarify that legislation. HMRC published data on its website on the impact of the film tax relief since its introduction in 2007. However, there does not appear to be any similar information, if any, on the  television tax relief, which has been in existence for a year. Can the Minister confirm the relief’s impact? How many television production companies have been claiming the relief? How many high-end television productions within the remit of the relief are currently eligible or benefiting? Equally, has the Treasury estimated how many jobs are in the high-end television sector and whether that has increased over the past few years? Finally, it would be helpful if the Minister could provide figures for how much the high-end television relief is currently costing the Exchequer.

Photo of Nicky Morgan Nicky Morgan Minister for Women, The Financial Secretary to the Treasury

I shall be brief, because there is broad agreement on the importance of these tax reliefs and how welcome they have been, as the hon. Lady says, to important cultural industries. Clause 33 makes changes to clarify that any animation or high-end television programme qualifying for tax relief is treated as a separate trade for the purposes of tax relief. Last year, the Government introduced new tax reliefs for companies involved in the production of animation and high-end television programmes. Just one year on, the relief has proven to be highly popular, attracting inward investment to the UK and benefiting many programmes that are already being broadcast on our screens, with many more in production.

The hon. Lady asked for an estimate of the impact of the relief so far. I can tell her that since April 2013 over £276 million of investment was made in high-end television and animation programmes. I am unable to confirm the cost, because the relief has been in place only since last April and we are waiting for HMRC to release data. Accounting periods vary, so the data are taking time to come in. It is therefore too early for me to predict exactly how many jobs have been created as a result of the relief, but we can highlight the £276 million invested thus far.

The current legislation already ensures that high-end television programmes are treated as separate trades. Some concerns exist in the industry, however, about whether only those animation programmes benefitting from the relief are treated as separate trades. We want to put that position beyond doubt, to ensure that television production companies with several programmes or animations in production are not potentially subject to an unintended cost and administrative burden by having to treat all their programmes, qualifying or not, as separate trades. No one has approached HMRC to say that they have been affected, but the clause clarifies what was previously understood. The changes introduced by the clause ensure that, for the purposes of the relief, only those programmes qualifying for the relief will be treated as separate trades.

Question put and agreed to.

Clause 33accordingly ordered to stand part of the Bill.