5 Creative Tax Reliefs

People in Cinema

The Creative Industries have done rather well in the last couple of years as far as tax reliefs go and more are just about to come on stream.

Creative industry tax reliefs (CITR) are a group of 5 Corporation Tax reliefs that allow qualifying companies to claim a larger deduction, or in some circumstances claim a payable tax credit when calculating their taxable profits.

These reliefs work by increasing the amount of allowable expenditure. Where your company makes a loss, you may be able to ‘surrender’ the loss and convert some or all of it into a payable tax credit.

Film Tax Relief (FTR) was introduced in April 2007 and 2 additional reliefs were introduced in April 2013. These are Animation Tax Relief (ATR) and High-end Television Tax Relief (HTR). A fourth relief for Video Games Development was introduced from 1 April 2014. A fifth relief for Theatre Tax Relief is to be introduced in Autumn 2014. HMRC

Let’s take a look at the 5 tax reliefs:

Film Tax Relief (FTR)

Your company will be entitled to claim FTR on a film as long as:

  • the film passes the culture test – it is considered a ‘British film’
  • the film is intended for theatrical release
  • at least 25% of the total production costs relate to activities in the UK

Animation Tax Relief (ATR)

Your company will be entitled to claim ATR on an animation programme if:

  • the programme passes the cultural test – a similar test to that for FTR but within the European Economic Area
  • the programme is intended for broadcast
  • at least 51% of the total core expenditure is on animation
  • at least 25% of the total production costs relate to activities in the UK

High-end Television Tax Relief (HTR)

Your company will be entitled to claim HTR on a programme if:

  • the programme passes the cultural test – a similar test to that for FTR but within the European Economic Area
  • the programme is intended for broadcast
  • the programme is a drama, comedy or documentary
  • at least 25% of the total production costs relate to activities in the UK
  • the average qualifying production costs per hour of production length is not less than £1million per hour
  • the slot length in relation to the programme must be greater than 30 minutes

Video Games Development

Your company will be entitled to claim VGTR as long as:

  • the video game is British
  • the video game is intended for supply
  • at least 25% of core expenditure is incurred on goods or services that are provided from within in the European Economic Area (EEA)

Theatre Tax Relief

Details to follow in the Autumn of 2014



5 ways to pay less VAT

Businessman get idea

Many small businesses assume there is only one type of VAT scheme, the standard VAT scheme where you pay VAT on Sales and reclaim VAT on Purchases but in fact there are several schemes and they could save you money:

Cash Accounting

Using the Cash Accounting Scheme, you:

  • pay VAT on your sales when your customers pay you
  • reclaim VAT on your purchases when you have paid your suppliers

You can use the Cash Accounting Scheme if your estimated VAT taxable turnover during the next tax year is not more than £1.35 million.

Cash Accounting can improve your cashflow if your customers pay later than you need to pay your suppliers.

Flat Rate Scheme

You can join the Flat Rate Scheme for VAT and so pay VAT as a flat rate percentage of your turnover if:

  • your estimated VAT taxable turnover – excluding VAT – in the next year will be £150,000 or less.

Generally you don’t reclaim any of the VAT that you pay on purchases, although you may be able to claim back the VAT on capital assets worth more than £2,000

There’s a one per cent reduction in the flat rate percentages for your first year of VAT registration.

You can get a list of Flat Rates by following this Link

Flat Rate is easy to use and can save you money if you have a lower than average level of VAT purchases.

Annual Accounting Scheme

Using the Annual Accounting Scheme, you make either nine interim payments at monthly intervals, or three quarterly interim payments, throughout the year. You only need to complete one return at the end of each year. At that point you must pay any outstanding amount. If you have overpaid, you will receive a refund.

You can use the Annual Accounting Scheme if your estimated VAT taxable turnover for the coming year is not more than £1.35 million.

This could save you money by saving time.

Retail Schemes

Using standard VAT accounting, if you are VAT-registered then you must record the VAT on each sale in your accounting records. But with the VAT retail schemes, you work out the value of your total VAT taxable sales for a period – for example, a day – and the proportions of that total that are taxable at different rates of VAT (standard, reduced and zero) according to the scheme you are using. You then apply the appropriate VAT fraction to that sales figure to calculate your VAT due.

You do not need to record VAT separately in your accounts for each and every retail sale you make. This is particularly beneficial if you make a number of low value and/or small quantity sales to the general public. This can save you a lot of time and record keeping.

Margin Schemes

Normally you charge VAT on your sales, and reclaim VAT on your purchases. However, if you sell second-hand goods, works of art, antiques or collectibles, there may have been no VAT for you to reclaim when you bought them. You may be able to use a VAT margin scheme. This enables you to account for VAT only on the difference between the price you paid for an item and the price at which you sell it – your margin. You won’t pay any VAT if you don’t make a profit on a deal. You can still use standard VAT accounting for other sales and purchases such as overheads.


Is your accountant qualified?

Accounting Standards

The ACCA issued a warning in May after research from cloud accounting software provider ClearBooks showed just 8 per cent of small businesses considered an accountant’s qualifications when choosing one. There is no law preventing anyone from calling themselves an accountant, and that as a result small businesses could be unknowingly paying someone without the necessary skills to handle their finances and help their business grow, who isn’t regulated or insured against risk.

CIMA (Chartered Institute of Management Accountants) Members in Practice are monitored by CIMA for:

  1. Continuous Professional Development
  2. Anti Money Laundering Compliance
  3. Professional Indemnity Insurance
  4. Continuity Agreements
  5. Letters of engagement
  6. Ethical conduct

CIMA operates a Masters degree standard scheme of qualifying examinations for prospective members. It is active in promoting local education, training and management development operations, the promotion of new techniques through its research foundation and the dissemination of management accounting practices through publications and other media related activities. WIKIPEDIA

You can find out more at www.business-accountant.com and www.cimaglobal.com

Why is it that small businesses do not check that their accountant is qualified?


5 key questions you need to ask your FD


As businesses grow, their needs increase. The person steering the finances needs to be someone who can take on a broad commercial role. Forecasting, IT, tax issues, insurance and back office functions – all these need to run smoothly. But a fast-growth business needs someone who can anticipate both future opportunities and potential problems.

A good financial director will help owner-managers understand which aspects of the business are the most profitable, as well as forecasting ways to exploit other opportunities. (Santander)

So what key questions should you regularly ask your FD…..

  1. What is our cash cycle and how can we improve it – Cash Cycle Blog
  2. What Key Performance Indicators should we use and what are they telling us – KPI Blog
  3. How can we improve profitability – 15 ways to improve profitability Blog
  4. What is our Business Plan and is it the right plan – Business Plan Blog
  5. Can we reduce Overheads – 10 creative ways to reduce overheads Blog


4 places loved by Home Based Workers

According to Freelancer.co.uk, the most popular places to work at home are

• 43% work in their home office or study;
• 28% prefer to work in their kitchen;
• 17% work in the garden shed;
• 12% work in the bedroom.

Take at closer look at home based working in this infographic and the blog links




Home Worker


No more tax this year! Tax Freedom Day was 28th May


May 28th 2014 was the day when average earners had paid their tax for the year and started working for themselves.

It is calculated by comparing general government tax revenue with Net National Income (NNI). The total of all government tax revenue – direct and indirect taxes, local taxes and National Insurance contributions – is calculated as a percentage of NNI at market prices. This year it comes to 41.09%. That percentage is then converted to days of the year, starting from 1 January. The first day of the year that Britons work for themselves rather than the taxman is Tax Freedom Day. (Adam Smith Institute)

This year it was 3 days earlier than in 2013, hooray, lets hope it comes even earlier next year.

So in 2014, for 148 days of the year every penny earned by Britons was taken by the government in tax.



7 situations where you might be able to claim tax credits…


You could claim Working Tax Credit if:

  • you’re aged 16 or over
  • you work a certain number of hours a week
  • you get paid for the work you do (or expect to)
  • your income is below a certain level

Here is a summary of how much you could claim:

Element Amount
You’re a couple applying together Up to £1,990 a year
You’re a single parent Up to £1,990 a year
You work at least 30 hours week Up to £800 a year
You have a disability Up to £2,935 a year
You have a severe disability Up to £1,255 a year (on top of the disability payment)
You pay for approved childcare Up to £122.50 (1 child) or £210 (2 or more children) a week

Reasons why you might be able to claim or find it difficult to claim:

  1. 5 million claims are made each year, have you checked you eligibility with the https://www.gov.uk/tax-credits-calculator
  2. Often small business owners have low incomes, particularly when the business is in the start up phase meaning they may be able to claim
  3. If you live in another EEA country but you are still liable to pay (and actually pay) UK National Insurance contributions (for instance you live in Republic of Ireland but work in Northern Ireland) you may still be able to claim
  4. If you (or your partner) go abroad for up to eight weeks at a time, HMRC will treat you as if you are still in the UK, providing you intend your visit abroad to be temporary. Temporary means you expect it to last less than 52 weeks.
  5. Couples find it complicated – Members of a couple must make a joint claim with their partner. Although this may appear a fairly straightforward and sensible requirement, it is one of the more complicated and problematic parts of the tax credits system. Ask your accountant for help.
  6. Crown Servants are exempt from the absence rules
  7. One area of particular difficulty in determining whether to make a single or joint claim is where one partner is in the UK and the other is not. The interaction with various EU law rules makes this a difficult area.


10 surprising accountancy facts

Looking at phone

Here are some surprising, strange and unusual facts about accountancy…

  1. Franciscan friar Luca Bartolomeo de Pacioli is known has the father of accounting, although double entry had been around for centuries, he was the first to write a book on it (27 pages).
  2. It was FBI accountants that brought down Al Capone in 1931, FBI now employees 1,400 Accountants as Special Agents
  3. Mick Jagger and  Janet Jackson trained as accountants before becoming singers
  4. 60% of taxpayer hire an accountant to help them do their tax returns
  5. Bookkeeper and Bookkeeping are the only word in the English Language to have 3 consecutive double letters
  6. Monty Python frequently poked fun at the accounting profession.  One possible reason for their targeting of the accounting profession is that John Cleese’s father wanted him to become an accountant.  He was to work for Grace, Derbyshire and Todd Chartered Accountants on Whiteladies Rd, Bristol. (strange accounting facts)
  7. J. P. Morgan got his first Wall Street job as a junior accountant. Five years later he founded his own company.
  8. Erin Brady who won Miss USA 2013 is an accountant.
  9. St Matthew the Evangelist, author of the first of the Gospels, is the patron saint of accountants.  He is also the patron saint of tax collectors, bookkeepers, stock brokers and bankers.
  10. Compter was the original word of accounting. It was a derived from a French language.


Is your pension going Dutch?

Amsterdam, canals and bikes

I love Holland but are their Collective pensions better than ours?

Collective funds pool all contributions into one big fund, so the administration costs are lower and pensions are paid from the fund rather than having to buy annuities.

By running funds collectively rather than individually (the British model) costs are reduced.

Some experts suggest that savers will increase their investment returns by 30%.

An article in the Telegraph 3rd June 2014 commented…

What is certain is that the schemes are a long way from the final salary “gold standard”. There are no guarantees, not even the certainty of a fixed income that you get with an annuity. You may get inflation-linked increases, you may not.

Assuming that these schemes do become available in the coming years, the best course for most workers would probably be to use them for some, not all, of their pension savings, with the rest in traditional schemes, self-invested pensions or Isas.

But will they ever see the light of day? There is little incentive for companies to back them – finance directors remember what happened with final salary schemes, which drove many firms to the brink of bankruptcy thanks to endless “gold-plating”.

So will your pension be going Dutch?


15 Brilliant Tax Free Benefits in Kind

Tax Free Bags Represent Duty Exempt Discounts

It’s P11D time, but have you considered giving your employees benefits in kind that are tax free, here are some to choose from:

  1. Pensions – Up to £40k can be paid in to you pension schemem by your employer (2014/15)  and you can use carry forward to pay in even more
  2. Childcare – Up to £55 per week but check the rules to makesure your childcare complies (HMRC Leaflet IR115)
  3. Mobile Phone – One per employee
  4. Lunch – Tax Free Lunch Blog
  5. Cycle Schemes – Cycle to Work Blog
  6. Fitness – Fitness Blog
  7. Parties and Gifts – Christmas Blog
  8. Parking – Parking Blog
  9. Business Mileage Allowance – 45p for the first 10,000 miles then 25p
  10. Long Service Award – A bit restrictive as you need 20 years service, the tax free amount is £50 x the number of years
  11. Eye Tests and Spectacles – The Eye Test must be needed under the Health & Safety at Work Act
  12. Suggestion Schemes – Suggestion Scheme Blog
  13. Insurance such and Death in Service and Income Protection – Medical Insurance Blog
  14. Travel Expenses – Travel Blog
  15. Working From Home – Working from Home Blog