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Animation Tax Relief

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If you’re reading this, chances are you’re looking for more information on Animation Tax Relief. ATR is a government incentive for the creative industry, and you could well be eligible to claim a rebate of up to 25%! Continue reading to understand more about ATR, what relief you may be eligible for, and how to claim it.

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What is Animation Tax Relief?

If you’re part of the creative industry in the UK- you can finally rejoice because animation production companies are now supported with ATR.

Animation Tax Relief is a tax rebate against the many costs incurred during pre-production, principal photography stages, and post-production of new animations in the UK.

ATR is one of 8 Corporate Creative Industry tax reliefs that allow qualifying animation programmes to increase their allowable expenditure. However, it’s worth noting that to qualify as an animation programme, projects must incur at least 51% of the core expenditure on animation production expenditure.

Companies wishing to claim Creative Industry tax reliefs on a completed programme will need to have passed the BFI Cultural test (and obtained the final certificate), be applicable to Corporation Tax, and be directly involved in Animation Programmes, at least as an Animation Production Company.

Animation Tax Relief

Why TaxBite?

TaxBite Accountants are an experienced and approachable team of Chartered Accountants with the sole aim of providing top-quality services to all businesses & individuals looking to claim any Tax Reliefs. 

Whether you’re an Actor or an Entrepreneur with an Amazon business – the wide range of clients we’ve helped is endless. So get in touch with us today!

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Animation Tax Relief Claims

Check out some animation tax relief claims that you may be entitled to

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What is an Animation Tax Relief Loan?

An ATR Loan is the UK government’s answer to the rigidity of the fund release structure within the animation sector. It is common for cash flow to be restricted in this field, so Animation Tax Relief loans can assist businesses in getting their tax relief much sooner than they usually would.

Who can claim Animation Tax Relief?

To be eligible and claim for ATR, the animation or project must meet the following criteria:

Costs relating to official co-production and pre-production, principal photography, and post-production of the project are known as the core expenditure – noted above. The sole company must be responsible for the core expenditure/total production costs.

It’s worth being aware that businesses must be actively involved in plans, decisions, negotiations, and goods and services. Both the British Film Institute (BFI) and HMRC administer this process. It’s worth noting that animations commissioned together are treated as one programme by HMRC, not as a separate trade.

All companies must have passed the BFI’s Cultural Test or qualify as an official co-production to be considered for ATR. The Cultural Test is comprised of four sections and is marked out of 31. Companies must achieve at least 16 points out of the 31 points to pass the test and receive the British Cultural Certificate. Below, we’ve outlined some tips to help maximise your chances of passing the test:

  1. Section A: Content of the Animation Programme – the animation programme must either be set in the UK or an EEA (European Economic Area). Extra points are awarded for animation programmes containing British or EEA lead/main characters. Using British or EEA-related subject matter or underlying material can give your company more points here. For bonus points, you can record the dialogue in the English language!
  2. Section B: Cultural Contribution – make sure the animation programme represents British heritage and creativity to win big in the Cultural Contribution section.
  3. Section C: Location – Also known as Cultural Hubs, Section C of the British Cultural Test is based on the use of British visual design and animation shooting. Ensuring at least 50% of the design, layout, VFX, music and audio recording takes place within the UK will help you score in this section.
  4. Section D: Cultural Practitioners – The fourth part of the Cultural Test is centred around who’s part of the company. Ensuring your leadership team members, such as directors, products, actors, cast, and crew, are EEA citizens, or residents will help you achieve points in this part of the test. It’s worth noting that at least 1 of the HoDs must be an EEA citizen or resident.

Along with the test, companies must also supply supporting documents, which can be attached to the final application form.

For BFI to begin their assessment, companies will need to send the BFI a printed copy of the application form, along with a completed statutory declaration and, in some cases, an accountant’s report. The BFI will not accept virtual copies of the statutory declaration.

Other qualifying attributes projects must have are that there must be at least one APC registered as a UK Limited Company with Companies House. In addition, the APC has to be in charge of all animation programme-making activity.

How much can I claim from Animation Tax Credits?

There is no overall claim limit on Animation Tax Credits. However, relief is available to any qualifying animation production expenditure incurred in the UK. This is either 80% of the total core expenditure spent or the actual UK core expenditure incurred – whichever is lower. At this point, Animation companies can claim upwards of 25% of the total UK qualifying expenditure; this is also extended to EAA qualifying expenditure.

If you require any assistance in this, TaxBite can assist you.

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When would I receive an Animation Tax Credit from HMRC?

Businesses generally receive their Animation Tax Relief once the claim has been processed. This happens at the end of the company’s filing date/financial tax year registered with Companies House. The claims process is usually complete within a time frame of 28 days.

What animation will not qualify?

Below, we’ve outlined a list of animated programmes that do not qualify for Animation Tax Relief:

We’d also like to mention that all the animation programme projects that have failed to pass the cultural test will not qualify for Animation Tax Relief unless they qualify as an official television co-production.

As we’ve mentioned, at least 10% of the core expenditure must be UK expenditure. Non-UK expenditure core costs of higher than 90% will mean that the project is not eligible for ATR.

If your company is not liable to Corporation Tax, you will not be eligible for any Creative Tax Reliefs.

What is the Animation Tax Relief claims process?

To claim ATR, there is a process any animation project must follow. First, companies must obtain an Interim certificate from the BFI during the early stages of production before animation shooting begins.

Companies can apply for Interim Certification at any point before or within production.

This is then followed by the Cultural Test process, where companies will receive a final certificate upon successful completion, as we mentioned earlier in this article.

Following post-production, core costs will need to be outlined to determine if a claim is eligible. Statements relating to core expenditure must be split by UK and non-UK costs while also being categorised. You will find detailed guidance on the process further on in this article.

When looking to claim Animation Tax Relief with TaxBite, our process is as follows:

  1. Getting To Know Each Other: Start your free 45-minute session with us, where we talk you through Animation Programme Tax Relief, go through our process, and inform you of your eligibility.
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  1. Company Analysis: We will conduct our research analysis of your company, assessing all eligible costs to calculate the maximum benefit allowable to you.
  2. Submission: We will handle the submission of your claim to HMRC once we’ve gathered and completed all of the relevant documents (including, but not limited to, Corporation Tax information, Core Expenditure details, total production budget and costs, non-production activities, development expenditure, and any other UK expenditure details).
  3. Within the following 28 days, HMRC will process your claim and payout the tax relief. TaxBite will take care of any new HMRC requests for additional information.
  4. Companies can create, amend, or withdraw claims up to one year after the Company’s House filing date. In rare circumstances, HMRC may even agree to accept late claims. TaxBite will be able to help investigate this further if applicable.

How long does it take to receive an Animation Tax Credit advance?

For those looking for a quick loan, LOAN/Affiliate COMPANY are happy to provide Tax Relief advances within days.

Following your submission of the online application form with all the relevant information and signing of the required legal documentation, we should be able to make your loan payment straight into your business bank account.

Animation Tax Relief loans are the perfect solution for new businesses to get going with their animated programme promptly.

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Allow the experienced team at TaxBite to take any stress away from your team and let you get on with what you do best; Animation.

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Contact us today to begin your application to claim Animation Tax Relief.

If you’re not sure if you qualify for Creative Industry Tax Relief with an advertisement programme, a panel show, current affairs or discussion programme, or any programmes animated for training purposes, we’ll be happy to discuss other potential tax reliefs you could still be eligible for.

Companies with mixed content seeking more eligibility information can contact us for more detailed guidance. For example, if you are producing an advertisement or promotional programme, or if a similar programme consists of any activity you think may be deemed ineligible, our experienced accountants can help clarify where you stand.

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