The Spring Budget for businesses

Creative industries

The Chancellor announced a raft of changes to the creative industries tax reliefs which will apply from 1 April 2025. These changes include:

• Theatre Tax Relief credits and Museums and Galleries Exhibition Tax Relief credits will be reduced from the temporary rates of 50% and 45% for touring and non-touring productions and exhibitions to permanent rates at 45% and 40% respectively. In addition, Museums and Galleries Exhibition Tax Relief was due to expire from 1 April 2026 under a sunset clause. This sunset clause has been removed
• Orchestra Tax Relief credits will be set permanently at 45% for all productions.

In the above cases the rate of tax credits were originally set to decrease to their lower pre-pandemic levels, or to expire entirely, by 1 April 2026 and so these announcements should be welcome news to the sector.

There were also some announcements on Audio-Visual Expenditure Credits:

• The main credit will be increased for certain qualifying expenditure from the current 34% rate to 39%. Relief is currently capped at 80% of qualifying expenditure, though this limit will be removed for certain costs. The government has announced that the types of expenditure qualifying for the increase to the tax relief will be subject to consultation and implemented through a future Finance Bill
• A new enhanced credit of 53% on certain qualifying expenditure will be introduced for smaller productions where the film budget is under £15 million (UK Independent Film Tax Credit). The credit will be introduced on 1 April 2025, though qualifying expenditure incurred from 1 April 2024 will qualify provided the film started principal photography on or after this date. A new British Film Institute test will be introduced to determine which companies qualify for the relief, details of which have not been announced at this stage.

Additionally, from 1 April 2024 there will be 40% relief from business rates for eligible film studios in England for ten years.

Stamp Duty Land Tax (SDLT) – Multiple Dwellings Relief

The government announced that it will introduce legislation in Finance Bill 2024 to abolish Multiple Dwellings Relief (MDR) with effect from 1 June 2024. The legislation affects residential property purchases in England and Northern Ireland only (not Scotland and Wales which have different equivalent taxes – Land and Buildings Transaction Tax and Land Transaction Tax respectively – it remains to be seen whether they will follow with similar changes).

The relief has been available since 2011 and broadly reduces the SDLT payable when a buyer purchases at least two residential properties in a transaction.

Purchasers of student housing are potentially one of the hardest groups hit. Where previously an MDR claim on a purpose-built student block may have reduced the SDLT to as low as 1%, now it will be at least 5%.

For those who are purchasing six or more dwellings in a single transaction, the “six-pack” rule that treats this as a non-residential purchase subject to lower rates will remain, providing some mitigation.

This change will come into effect for transactions which complete, or which substantially perform, on or after 1 June 2024. Transitional rules mean that MDR can still be claimed for contracts which exchanged on or before 6 March 2024, regardless of when completion takes place, provided there is no variation of the contract after that date.

Although not within the initial Budget documentation, we are aware from HMRC that special transitional rules will also apply to linked transactions, so that transactions occurring after abolition of MDR cannot be treated as linked to earlier transactions where tax was calculated in line with the MDR rules.

SDLT – Acquisitions by Registered Social Landlords (RSLs) and Public Bodies

The government has announced changes to update the exemptions for certain acquisitions by RSLs where they use a public subsidy to acquire the property. They are updating relevant definitions, including the definition of public subsidy to include receipts from the disposal of social housing that can be re-used for further provision of social housing.

The government has also announced the removal of public bodies from the 15% slab rate on certain acquisitions of property where the value is over £500,000.

Oil and gas

The Energy Profits Levy charged on the profits of oil and gas producers will be extended to March 2029, an extension of one year. Legislation will also be introduced to make clear that the Levy is temporary and will end early if oil and gas prices drop below levels set by the Energy Security Investment Mechanism.

Full expensing for plant held for leasing

Full expensing gives a 100% deduction in the year of spend to companies purchasing new and unused plant and machinery but does not currently apply to assets held for leasing. The Chancellor signalled his intention to extend full expensing to qualifying plant and machinery held for leasing, though its introduction will not be until “fiscal conditions allow”. The timing of its introduction is therefore uncertain, and it will not be included in the Spring 2024 Finance Bill.

Read more about the Spring Budget