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R&D Tax Credits and £20m extra for the creative industries

The government announced details of exactly where an extra £20m investment will be spent within England’s creative industries. And their recent evaluation of the R&D Tax Credit scheme shows that companies in the Arts, Entertainment and Recreation sector receive the highest average claim amount. Excellent news.

Considering that the creative industries sector is now worth £101.5bn and is growing at about double the rate of the economy as a whole, all this investment is more than justified.

R&D Tax Credit Claims in the Arts, Entertainment and Recreation Sector

The Arts, Entertainment and Recreation sector only made 1.06% of all the R&D Tax Credit claims for the 2016-17 tax year. That’s only 360 out of 33,880 SMEs from the creative field. They received a total of £40m, only 2.2% of the total R&D credits. But the average claim value for those 360 companies that did apply was £111,111. This is the highest average claim of any sector.

From these statistics, we can see that businesses in the creative sector are missing out on claiming for R&D Tax Credits. This may be because of an assumption they are not making a “scientific or technological advancement” during their projects. Or perhaps because they don’t know exactly what costs can be claimed for or how to make a claim. Maybe they’ve just never heard of this particular tax relief. This is such a shame because there are many ways in which companies in this sector are ‘doing’ R&D, they just don’t recognise it. For example: building complex bespoke staging or tweaks to your digital systems to improve user experience or speed up production time. It’s all about how you look at it.

There’s even a specific tax relief for those creating the next video games, which is also vastly under claimed. It’s called the Video Games Tax Relief (VGTR) and is worth 20% of your production costs to reinvest.

New Government Investment in the Creative Industries

The government has announced a £20m investment for the Creative Industries, which is divided up into a variety of pots with specific purposes.

£14m: Creative Careers Programme The aim of this programme is to give two million young people professional advice about pursuing a career in creative jobs and so increase the diversity of those entering the sector. It involves industry experts working with schools and colleges and hopes to reach 160,000 students by 2020. Part of its brief is to increase the number of apprenticeships in this industry sector to 3,000 by 2025.

£4m: Finance available for creative businesses to help them to grow, in three regions; Greater Manchester, West Midlands, West England.

£2m: Get it Right campaign. This money is to keep the Get it Right Campaign up and running until 2021. It focuses on educating people about copyright infringement of creative content.

£200,000: Digital Schoolhouse Programme. This is run by Ukie, the games trade organisation, and aims to inspire the next creators of computer games. This money will extend the programme to 7,000 more students by the next academic year by getting into 50 school by next September. That means 3,000 more teachers trained through the programme and their 25,000 children that get the benefit.

£190,000: UK Games Fund, for Pitch Development Programme. This is designed to provide industry support to new companies, so they can access UK Games Fund grants worth £25,000.

Margot James, Minister for the Creative Industries, said: “Millions of people around the world enjoy our world-class creative and cultural output every day and we want to stay as a frontrunner in these vibrant sectors. Our creative industries are a vital part of the economy, contributing over £100 billion to the economy so it is important we maintain the pipeline of talent. This package will take the sector from strength to strength by arming the next generation of creatives with the necessary skills and giving businesses in the sector the support they need to succeed.”

Even if you can’t take advantage of any of this new government money, you can ask us to look into your eligibility for R&D Tax Credits. Remember that average claim amount – £111,111. What does your next project look like with that kind of investment behind it? There is literally nothing to lose by getting in touch, or by us submitting your R&D Tax Credit claim.

We’ll tell you if your work is eligible, which costs are applicable and show you how to navigate the rest of the application process. It’s a shame to miss out on tax relief that you are entitled to and boosts your business. Incidentally, one of our favourite things about this tax relief it that it is not success dependent. Even if your project completely fails to meet its aim, you can still get R&D Tax Credits for the attempt. Great isn’t it?

 

Jamie Smith

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