Creative industry tax reliefs are a group of tax reliefs that allows qualifying companies to increase their amount of allowable expenditure and thereby reduce the corporation tax liability. In case the company incurs a loss during the period, you will be able to a surrender this loss and convert it into a payable tax credit.
To claim a creative tax credit, you will have to surrender a loss. Once surrendered, you can fill in tax reconciliation boxes.
SimpleStep:
CT600 core > Trade and professional income > Tax adjusted profit/loss - other adjustments.
Use the wizard next to Creative Enhanced Expenditure and enter the figure to adjust the profit chargeable to tax as required. Choose the type of the creative enhanced expenditure from the drop down. The % claimed will default to 100% as the system assumes that the amount of enhanced expenditure that can be claimed has already been calculated. If this is not the case, please amend the % rate.
Surrendering the loss
Go to CT600 Core > Losses, Management expenses, NTLRDs and NTLIFAs > Trading losses.
Enter the figure for loss Surrendered for Creative Tax credit.
Claiming repayment for the credit
Go to Overpayments and repayments > Repayments for the period.
Enter the amount of the tax credit in box 875/box 885.
Tax Reconciliation
Go to Tax reconciliation.
Use box 540 to calculate the Research and development tax credits and the Creative tax credits you are claiming. The loss being surrendered is automatically entered, based on the values entered in the Trading losses screen.
If you are surrendering a loss for Creative tax credit relief, you need to enter the type of relief you are claiming, i.e. film tax relief, animation tax relief, theatre tax relief etc.
Enter the % that the company is entitled to claim.
HMRC Forms:
Go to CT600 Core > Core > Page 8.
Select Use enhanced expenditure wizard.
Tick box 650 (SME).
Use the wizard to enter the amount of qualifying expenditure and you will see that the rate of 230% has been applied to calculate the total value of enhanced expenditure. 130% is the additional deduction made in the computation as 100% has already been claimed in the profit and loss account.
Surrendering the loss
Go to CT600 Core > Core > Computations > Losses, Management expenses, NTLRDs and NTLIFAs > Trading losses.
Enter the figure for loss Surrendered for Creative Tax credit.
Claiming repayment for the credit
Tax Reconciliation:
Go to CT600 Core > Core > Page 6.
Use box 540 to calculate the Research and development tax credits and the Creative tax credits you are claiming. The loss being surrendered is automatically entered, based on the values entered in the Trading losses screen.
If you are surrendering a loss for Creative tax credit relief, you need to enter the type of relief you are claiming, i.e. film tax relief, animation tax relief, theatre tax relief etc.
Enter the % that the company is entitled to claim.