By Maximilian Clarke
Recognising the crucial role research intensive or creative industries play in the UK economy, Chancellor Osborne has announced in the 2012 Budget a host of tax incentives to nurture their growth.
The current system of film tax credits is to be revised to incentivise producers of ‘high end’ TV programmes. No more, assures the Chancellor, will TV programmes like Birdsong be forced to film overseas whilst Wallace and Gromit will remain in the United Kingdom.
Research-intensive industries are also in line for a tax credit boost. An estimated 1 in every 5 medical drugs used globally stems from UK research, the chancellor observed, and this input must be protected. Pharmaceutical companies will also be in line for tax perks- welcome news for the UK’s increasingly strained drugs industry that has seen a number of high profile plant closures including Astra Zeneca and Pfizer.
Chancellor Osborne’s tax breaks for creative firms have, however, been subject to criticism, with entrepreneurs deeming tax cuts and simplification in less glamorous sectors including business software developers to be more beneficial. Rajesh Agrawal, Chairman and CEO, Xendpay.com, comments:
“In the current economic climate, the country needs a business and entrepreneur friendly budget. While the cut in Corporation Tax is welcomed, the tax relief in certain sectors like video games, animation and high end television production seems like window dressing. There are several other sectors which need equal if not more encouragement.
“Small firms have limited resources and are stretched, simplification of the tax system for them will certainly be helpful.”
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