Your trusted adviser for R&D Tax Credits, Creative Tax Relief, and R&D Grants
Your trusted adviser for R&D Tax Credits, Creative Tax Relief, and R&D Grants
Animation Tax Relief (ATR) is a government funding incentive to support animation programmes and is currently worth up to 20% of core production costs. ATR is managed by HMRC and claimed as part of the Company Tax Return.
Myriad has been helping UK animators for over a decade. As your ATR partner, our specialist tax advisers and BFI consultants will ensure your claim is accurate, compliant, and optimised.
We've prepared a simple guide to help you understand what Animation Tax Relief (ATR) is, how it works and whether you’re eligible.
Animation Tax Relief (ATR), is a creative industry tax relief incentive, funded by the UK government.
ATR supports UK animation production companies by offering them a tax rebate against the money they spend on the pre-production, principal photography and post-production of a new animation project.
Animation Tax Relief is worth up to 20% of the core production costs of an animation project. The production company can claim ATR on whichever is the lower:
If the production is profitable, the Animation Tax Relief can be used to reduce a Corporation Tax bill. If the animation makes a loss, claimants can receive a cash payment from HMRC at 20% of production costs.
To qualify for Animation Tax Relief, you need to meet the following criteria:
An animation will not qualify for ATR if;
Animation Tax Relief is claimed as part of the Company Tax Return (CT600) filed with HMRC. To make an ATR claim, you’ll need to be registered as a company and have the following documents:
HMRC has a specific approach for calculating an Animation Production Company's (APC) taxable profit and loss. There are restrictions on how losses can be used, which will vary depending on whether the programme is finished and trade has ceased.
Companies in film, high-end TV programmes, children’s TV programmes and animation can claim Audio-Visual Expenditure Credit (AVEC) on expenditure incurred from 1 January 2024. You can claim the following expenditure credit rates:
Myriad is a leading innovation funding consultancy that employs Animation Tax Relief application specialists, qualified cost accountants and corporate tax experts.
Our specialist team has proven successful in delivering maximum claims for UK Animation companies.
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If you want to claim Animation Tax Relief, your animation programme must be certified as British. You must pass the British Film Institute (BFI) cultural test to receive this certification.
To pass the BFI cultural test, complete an online application form for each animation programme for which you want to claim ATR. If the animation programme is intended as a series, you can make one application to cover all episodes within the series. The BFI will assess your application and award points based on the cultural content of the animation programme, its cultural contribution, its cultural hubs, and its cultural practitioners. To pass the test, each amination programme must score at least 16 out of 31 points.
Myriad Associates employs BFI application specialists who can help you pass this test. Contact us for advice.
The cultural test for animation programmes is set out in The Cultural Test (Video Games) Regulation 2014, but for more information, read this.
In addition to completing an application form for each animation programme, a Statutory Declaration to certify the truth of the particulars in the application is also required.
The Statutory Declaration can be made before a practising solicitor, a general notary, a Justice of the Peace, or any other officer authorised by law to administer a statutory declaration under the Statutory Declaration Act 1835.
An Accountant’s report is required if an application for a final certificate relies upon points in Section C and/or Section D of the cultural test. The Accountant’s Report must be prepared by a person eligible for appointment as a company auditor under Section 1212 of the Companies Act 2006.
The Accountant's Report is required when an application claims points in Section C and/or Section D.
The Accountant's report aims to verify the total and UK expenditure of the work in Section C and the nationality or residence of all persons in Section D.
The Accountant's Report must be prepared by a person eligible for appointment as a company auditor under section 1212 of the Companies Act 2006.
An Accountant’s Report can cost between £500 and £2,000 per application, depending on the video game costs and the number of applications you submit.
The BFI cultural test regulations require you to make a statutory declaration which states that the information you’ve given in your application is accurate.
A statutory declaration is required for both the Interim and Final certifications.
The statutory declaration must be made before a practising solicitor, general notary, Justice of the Peace or an officer authorised by law to administer a statutory declaration under the Statutory Declaration Act 1835.
You can apply for both Animation Tax Relief and R&D Tax Credits. However, you may only claim a given project cost against one of these schemes, not both.
In some instances, you can maximise your overall tax relief by applying to both schemes and claiming specific costs against each scheme on a project-by-project basis.
Myriad Associates can help you with this. To maximise your tax relief, we’ll study your projects, assess your costs and establish which project costs to claim under which scheme.
Non-core animation programme expenditure relates to initial design stage activities or commercial exploitation of the video game.
For example, initial concept artwork used to establish commercial viability is not a core expenditure and is not eligible for ATR. Marketing an animation programme is also considered a non-core expenditure.
Additonal ineligible expenditures include entertaining, publicity, promotion, audit fees, interest, completion bonds and other forms of insurance.
The amount of Animation Tax Relief (ATR) to which an Animation Production Company (APC) is entitled in respect of an animation programme trade is determined by the amount of core expenditure related to activity undertaken in the UK.
Where an animation programme is partly produced in the UK and partly outside of the UK, it will follow that some goods and services may be non-UK. In such cases, it will be necessary to apportion the relevant core expenditure between UK and non-UK expenditure.
This applies in the case of goods and services provided throughout core expenditure stages. It applies to expenditures incurred during pre-production, principal photography and post-production.
The apportionment method is not fixed and can be determined on a case-by-case basis. The key criterion is that it must be done fairly and reasonably.
There will often be more than one ‘fair and reasonable’ basis. The requirement is not that the apportionment must be made using the fairest and most reasonable basis but simply that it must be made fairly and reasonably.
You can claim animation tax relief on your animation program if;
As the legislation doesn’t define the term “animation”, the ordinary meaning applies. Therefore, an animation may include various techniques, which include but are not limited to:
Your animation will also need to qualify as a television programme, which is defined as “any programme (with or without sounds)" which:
There is a list of excluded programmes. If your animation programme falls into one of these categories, it will not qualify for the animation tax relief.
Step 1 of #
Is your business registered for Corporation Tax in the UK or are you a partnership with corporate owners?
Have you developed new or improved existing products, processes or services in the last 2 accounting periods?
Does your business have fewer than 500 staff, and either: A turnover of no more than €100 million; or Gross assets of no more than €86 million?
Sorry, you must be a UK limited company or be a Partnership with corporate owners to be eligible for R&D tax credits.
In order to qualify for R&D tax credits you must be seeking to advance science or technology within your industry. As you’ve not developed any new or improved any existing innovative tools, products or services, and not re-developed any existing products, processes or services in the last 2 years. It is unlikely you have any qualifying activity. If you’re unsure, email or call us and we’ll help clarify.
In order to claim R&D tax credits, you need to either employ staff or spend money on contractors, consumable items and other items. If you’re unsure, email or call us and we’ll help clarify.
Thanks for that!
Congrats!! Based on your previous answers, you will qualify for the SME scheme. If you’d like some help maximising and securing your claim, please email or call us.
Congrats!! Based on your previous answers, you will qualify for the RDEC scheme. If you’d like some help maximising and securing your claim, please email or call us.
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