Are TV shows British enough for tax relief?

Regulations will come into force next week to determine whether high-end TV programmes are British enough for tax relief purposes.

The Cultural Test (Television Programmes) Regulations 2015 (the 2015 Regulations) will come into force on 23 July 2015. This will amend the 2013 Regulations, which contain a points based cultural test used to determine whether a drama or documentary television programme is sufficiently British.

Under the 2013 Regulations, if the programme achieves a points score of 16 out of 31, the Secretary of State will be able to certify the programme as a British programme and therefore satisfy one of the requirements to qualify for tax relief under the Corporation Tax Act 2009 (CTA). Points are awarded for setting, origin of characters, story, language and cultural aspects of the programme as well as residence and nationality of the personnel involved in creating and producing the programme.

The 2015 Regulations update and modernise the cultural test for drama and documentary television programmes so that it conforms with the cultural test for film which was introduced in 2007 and amended in January 2015. For example, more points will be awarded when a high percentage of the dialogue in the programme is in English or a language recognised for official purposes by another EEA country where 75 per cent of the programme is in such a language, the programme will receive six points instead of the existing four points currently available under the cultural test in the 2013 Regulations. Additionally, where 80 per cent or more of a programme's principal photography, special effects or visual effects work takes place in the UK, four points will be awarded (as opposed to the two points currently available where 50 per cent or more of such work occurs in the UK). Overall a new score of 18 out of 35 will need to be achieved before the cultural test is passed.

The 2015 Regulations will also introduce a new 35 point cultural test for children's television programmes which will operate on the same basis as the updated cultural test for drama and documentary television programmes.

The full explanatory memorandum released by the Department for Culture, Media and Sport can be seen here.

By Holly Pearlman and Sam Churney, DLA Piper

Photo credit: Sherlock Hartswood Films/Prime Focus

http://blogs.dlapiper.com/mediaandsport

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