Tax planning is one small part of what accountants for media companies get involved in. There’s a range of government help for the creative industry, so let’s dig into what’s available to help you increase your bottom line.
What are creative industry tax reliefs?
Creative industry tax reliefs are a set of eight Corporation Tax reliefs and two Corporation Tax expenditure credits that allow qualifying media companies to claim a larger deduction when calculating their taxable profits. These reliefs work by enabling a company to reduce the amount of Corporation Tax to pay or by increase in the amount of allowable deductions. Even if your company is loss-making, you may be able to convert losses into a payable tax credit.
Accountants for media understand your tax relief options
There are many companies whose staff are unqualified who claim to be able to get tax relief for businesses. With HRMC opening many more investigations into tax relief claims, it’s vital to use accountants who fully understand the system and the claiming process.
What are the specific tax reliefs?
You may be able to claim the following reliefs against Corporation Tax:
High-end Television Tax Relief
Children’s Television Tax Relief
Museums and Galleries Exhibition Tax Relief
These tax reliefs enable eligible companies to claim up to 80% of total core expenditure, although there may be additional restrictions. More information is available on HMRC website.
In addition, available expenditure credits are:
Audio-Visual Expenditure Credit
Video Games Expenditure Credit
Qualifying for creative industries tax reliefs
To be eligible for these reliefs, all films, television programmes or video games must be certified as British. To get this certification, they must pass a cultural test managed by the British Film Institute. More information is available from the BFI website. It is also possible to qualify through an internationally agreed co-production treaty.
Controlling expenses in your media company
It’s very easy for costs in creative industries to spiral out of control. Many creative business owners find bookkeeping challenging which makes it easy to overspend on your budget when your reporting isn’t up to date. Accountants for media companies can support through the use of tools to easily capture and submit your receipts. Your accountant can also key an eye on your overall spending ensuring that you are making best use of your resources. The can routinely look for ways to reduce unnecessary expenses such as subscriptions that aren’t being regularly used.
Your accountant will help you understand which expenses are tax deductible so you can reduce your Corporation Tax or self-assessment tax bill.
Managing cashflow
One of the biggest reasons for business failure in creative industries is poor cash management. Too much cash flowing out of the business leads to liquidity problems if not rectified promptly. Your accountant should be monitoring your bank account to ensure you are able to pay upcoming bills. You can improve your cash position by:
- Negotiating longer terms with your suppliers
- Negotiating shorter terms with your customers
- Offering small early payment incentives to get cash in the bank more quickly
- Where relevant, reducing stock levels to minimise the amount of cash tied up in inventory.
If you become aware of a short-term cash flow problem, don’t panic. There are things you can do to tide you over until the cash starts flowing into your business again. Consider an overdraft from your bank or a short-term loan. Talk to your accountant about finding new funding sources such as angel investment.
Finding new clients
Accountants know lots of people. They are among the best-connected people in business, so ask your accountant for introductions to potential clients. Accountants for media companies often have established relationships with lots of other businesses in the creative industries so they can be the conduit to getting yourself better known in your field. It’s good practice to ask your accountant about ways they can help you build your professional network.
Industry networking groups are often good sources of new clients, along with word-of-mouth marketing, but don’t neglect other forms of business promotion, such as social media and website marketing. Depending on your services and where your ideal client is hanging out, it’s a good idea to spend some time creating your company brand online. If you are B2B, you should have an optimised LinkedIn profile and company page. If you don’t feel words are your strong point or you don’t have time to write yourself, use a copywriter to help you increase your online presence.
Understanding the fees charged by accountants for media companies
Is the accountant open about their fee structure? It’s a good idea to discuss possible fees for your personal tax planning work. Ask for an estimate and a list of what’s included. For example, do they offer a fixed monthly fee or will you be charged by the hour or for each letter or phone call. Establish this at the outset to avoid issues later.
What other support can you from your accountant?
Different accountants offer different services. Some only do tax work; others offer finance admin such as bookkeeping and company set up. Aside from tax and compliance, at Green & Peter, we can help you with ensuring that your business goes from strength to strength, and you don’t pay more tax than you have to.
Green & Peter, the best accountants for media companies in London and beyond
The Green & Peter team has worked with hundreds of creative business owners since we were established in 1993. Those 30 years experience means we know exactly where many media companies need support. Of course, we don’t only look after creatives, we also support other SMEs including property companies – developers, investors and others buying, selling and managing property, as well as sole traders and partnerships. We’ll work side by side with you to manage your costs and increase your sales. If you’d like 2024/25 to be your most profitable year ever, call us today on 0208 446 8100 for a free, no-obligation chat about your targets and ambitions.
