Media companies focus on debt reduction, but this must not be at the expense of business investment
Media businesses are focusing on paying down debt due to high interest rates, but RSM UK warns that an emphasis on reducing this liability should not be instead of but as well as capital expenditure or the critical need to invest in their business now.
According to a recent survey by the leading audit, tax and consulting firm RSM UK, nearly two thirds (65%) of media businesses have less debt now than six months ago, jumping from 50% last year. Only 15% of businesses have more debt now compared to six months ago, down from 23% in 2024.
David Blacher, partner and head of media industry at RSM UK said, “While a reduction in debt might be viewed as a good thing, particularly in the face of high interest rates, this means less money to invest in their business. These figures suggest that media businesses may be focusing too heavily on debt reduction alone, which may not be necessary as rates tick down. In turn, these businesses risk neglecting the need to strengthen, bolster and expand their ongoing and future operations. The UK government has been clear in its ambitions for growth. It’s important now that businesses take heed of how the government’s agenda can help them.
“Business investment is now more crucial than ever before during this period of uncertainty, driven by economic instability, global trade wars and a potential US recession. By deploying capital expenditure, investing in infrastructure and acquiring new teams, this will help ensure these businesses are resilient and so fit for the future.
“UK businesses have access to generous tax reliefs such as capital allowances, which allows companies to deduct the value of equipment, machinery and vehicles from their profits before paying tax, yet this doesn’t appear to be tempting enough for some. There’s also the R&D scheme, with over half of media businesses surveyed claiming R&D relief, but many are still facing challenge from HMRC.”
Of the businesses that submitted an R&D claim, 42% had their claim approved which was later challenged by HMRC and resulted in a repayment, while 32% submitted an R&D claim which HMRC challenged but later approved.
David added: “While it’s key that HMRC stamps out any unscrupulous R&D claims, there’s every risk that too much scrutiny could deter businesses from claiming the valuable relief. It could even push them to go overseas and benefit from competitors’ regimes instead. It’s a fine balancing act, but such tax reliefs need to be made as accessible as possible for genuine claimants to allow them to innovate and pursue their growth plans.”