TPC55110 | Calculation: surrenderable losses and Television Tax Credit: examples - single-period productions

The following examples illustrate how Television Production Companies (TPCs) that sustain a surrenderable loss can surrender that loss in return for a payable tax credit (TPC55100). In each case the production is completed within a single period.

Example 1

A TPC makes a programme with total core expenditure of £1m, all of which is UK expenditure. The programme was commissioned by a broadcaster which pays £900k for it. So in this example

• Income is £900k

• Expenditure is £1m

• Pre-TTR profit (loss) is (£100k)

• Enhanceable expenditure (UK core expenditure of £1m x 80%) is £800k

• Additional deduction is (£800k)

• Post-TTR profit (loss) is (£900k)

The surrenderable loss is the lesser of:

• the trading loss: £900k and

• the enhanceable expenditure on which the additional deduction for period: £800k.

In this case, the TPC can surrender up to £800k.

The amount of credit due is:

• the payable credit rate: 25%

• multiplied by

• the loss surrendered: £800k

giving a payable credit of £200k. This is equal to 20% of the total core expenditure. The TPC is not obliged to surrender the entire loss, but it will most likely do so.