Business tax reliefs

In the Budget the Chancellor announced a number of increases to tax reliefs and incentives. Notably, there are significant temporary increases in the cultural tax reliefs for theatres, orchestras, and museums for the period to 31 March 2024, with the museums and galleries exhibition relief extended until that date. There is also a relaxation in film tax relief from 1 April 2022. In addition, the £1 million Annual Investment Allowance (AIA) has been extended to 31 March 2023. Alongside the Budget there was an update on the designation of previously announced Freeport tax sites at the Humber, Teesside and Thames. These three Freeports will be able to begin initial operations from November.

AIA extension

The AIA was introduced in April 2008 and provides a 100 percent first year capital allowance for qualifying expenditure on plant and machinery up to a specified annual limit. Businesses claim the AIA in respect of expenditure which would otherwise be eligible for writing down allowances (WDAs) at 18 percent and 6 percent per annum on a reducing balance basis, so relief is given over a number of tax periods. The AIA therefore accelerates relief, typically simplifying processes for businesses and aiding their cashflow. Most businesses, regardless of their size and subject to certain conditions, can claim the AIA on their qualifying expenditure, although certain assets, such as cars, are excluded.

The AIA limit has changed several times since April 2008 but was permanently set at £200,000 from 1 January 2016. The AIA amount was temporarily increased to £1 million between 1 January 2019 and 31 December 2021 and was due to revert back to the £200,000 limit from 1 January 2022. However, it was announced in the Autumn Budget that the £1,000,000 AIA will be extended to 31 March 2023 to continue to encourage business investment and support economic activity. 

Creative sector reliefs

In very good news for a sector which has been particularly impacted by COVID-19 restrictions the Chancellor announced the following:

• Museums and Galleries Exhibition Tax Relief (MGETR) was due to expire (the ‘sunset’ clause) on 31 March 2022 – this has now been extended until 31 March 2024.
• Furthermore, the headline rates of tax credit available have also been temporarily increased significantly, as follows:
   

• New legislation will allow film production companies (for any new film commencing production on or after 1 April 2022 and ongoing productions that have not completed principal photography by 1 April 2022) to claim Film Tax Relief for films that were initially intended to be released in cinemas, but which are instead put on streaming services, as long as they meet the criteria for High-End TV Tax Relief. This will ensure that relief is not lost should a company decide to change its distribution method during production. 

Freeports

At Spring Budget 2021, the Chancellor announced the introduction of eight Freeports in eight English regions. A range of tax incentives will be available within the designated ‘Freeport tax sites’ including a 100 percent enhanced capital allowance for companies investing in plant and machinery, a new 10 percent rate for the Structures and Building allowance, as well as National Insurance contributions, business rates and stamp duty land tax reliefs.

It was confirmed in the Autumn Budget that secondary legislation will be introduced on 29 October 2021 designating the first tax sites at the Humber, Teesside and Thames Freeports, and those Freeports will be able to begin initial operations from November. In addition, maps have been published showing the extent of the Freeport tax sites at these three locations.