HMRC pay out to creative industries up 36%, but first reduction to video games tax relief raises concerns
New statistics published today show that HMRC paid out £1.66bn in creative industries tax reliefs for the year to 31 March 2022 – a 36% increase from the previous year.
This was largely due to an impressive rise in high-end TV reliefs which have increased by 131% to £829m and now represent half of all creative sector payments made. Although film relief still accounts for 31% of total payments, it has historically always attracted the lion’s share. Combined spend on film and high-end television production in the UK reached a record high of £6.4bn in the year to June 2022, according to the British Film Institute. Despite dropping 16% to £5.4bn in the 12 months to June 2023, these figures demonstrate it remains a significant industry in the UK.
Whilst this is good news for the film and TV industries the numbers aren’t all rosy. £189m in tax reliefs were paid out to video games businesses in the same period – a 6% decrease on the previous year. This is first decline since the relief was introduced in 2014, which HMRC attributes to the concerning fact that larger studios are now doing less work in the UK.
Will Simpson, creative sector director at RSM UK said: ‘With high-end TV showing such strong results, this clearly demonstrates how the industry is moving away from feature length films to high quality TV series. These figures show the UK is able to attract international studios to produce high quality content here, helped by our incentives and world class facilities and talent. With challenges in the recruitment market and uncertainty surrounding proposed changes to these incentives from 2024, the UK government should ensure that they continue to encourage and support this important industry.’
Video games tax relief has helped to bring highly skilled employment to an export focused industry, where 80% of the workforce is based outside of London. However, the UK competes on an international field to attract this mobile workforce and there are storm clouds on the horizon. Other countries have seen the success of this regime in the UK and many now have similar incentives. The recruitment market for specialist talent in the UK remains tight, and proposed changes to the regime from 2024 are making the industry nervous.
Will Simpson adds: ‘These creative industry incentives have been a huge success story for the UK and it’s been great to see how they have helped drive investment, creativity and employment across the country. With so many other challenges in the current economic environment and uncertainties regarding changes to these incentives, the UK government needs to ensure that these reliefs remain competitive in the international landscape.’
