The rights and wrongs of a pasty tax, granny tax and a 5 per cent cut in the top rate of income tax continue to be pondered weeks after George Osborne presented his Budget to Parliament.
But where there was bad news for Greggs, there was good news for the UK's creative industries, for which the Chancellor announced a raft of tax benefits and the creation of a new scheme to tempt angel investors.
Olswang, alongside other industry groups, has lobbied the Government for a video games tax credit for many years. The UK video games industry, worth £1.7 billion in 2009, employs around 9,000 creative staff in 300 studios and has produced classics such as Batman: Arkham Asylum and Lego Star Wars. It is, however, facing stiff competition from Canada, whose government already offers targeted tax breaks.
The Chancellor was initially averse to the idea, calling such tax breaks "poorly targeted," but he has now changed his mind: from April 2013, tax credits will be available to the industry. In preparation, video games developers must seek to ensure that all of their games can benefit - whatever the format - and to establish whether or not they can be deemed "cultural" if necessary to benefit from EU state aid.
Television production companies will also be able to benefit from tax breaks in 2013, where a production is intended for international distribution and has a budget of at least £1 million per hour. This should help stem the exodus by UK production companies choosing to take advantage of foreign tax credits: for example, The Tudors, Julian Fellowes' Titanic and Camelot were all produced abroad.
Additionally, companies of any size will be able to claim a payable tax credit on research and development expenditure - in companies making losses being eligible for a cash payment.
These tax breaks recognise the importance of our creative industries, but just as important is encouraging investors to part with their money.
New from the Budget is the Seed Enterprise Investment Scheme (SEIS), which will benefit the youngest creative companies and angel investors alike: companies will find it easier to obtain seed capital as investors will be able to reduce the risks on their investments by taking advantage of special tax breaks.
Investors will be eligible for income tax relief of up to 50 per cent on investments of up to £100,000 a year. Provided an investor holds shares in a company for more than three years, any gains they make will be tax free. Additionally, over 2012-13, investors will be able to reinvest gains of up to £100,000 in a SEIS company without paying a penny of capital gains tax.
We expect investors to be able to use the SEIS by the summer. Tax relief remains available for individuals looking to invest through the Government's existing Enterprise Investment Scheme (EIS) and through Venture Capital Trusts (VCTs).
The Government's moves to liberate the tax regime for creative companies are most welcome and recognise the essential part the industry plays in growing the UK's economy.
This article was first published in The Times on-line.
Leave your comment