The European Commission has greenlit the UK government’s proposed tax credits for high end TV and animation meaning the new system will be in place from April 1.

The tax reliefs are designed to ensure that big budget UK drama does not continue to head overseas while encouraging inward investment from the likes of the US.

The drama credit will be available to productions with a budget of at least £1m ($1.5m) per hour slot.

The EC’s approval for state aid was the final hurdle before the UK government could begin offering the long-anticipated credit, which will provide a 25% tax break. Applicants will be required to pass a cultural test, administered by the British Film Institute (BFI).

The government’s recent Budget announcement revealed that £5m ($7m) is expected to be allocated to the tax credit system over the next 12 months. Forecasts anticipate that this will grow to £25m ($38m) in 2014/15 and £65m ($98m) by 2017/18.

Stephen Bristow, head of business development for film and TV at accountant Saffery Champness, worked closely with the government on structuring the new tax reliefs.

Bristow said: “Today’s confirmation that the Government has received the greenlight from the EC for the introduction of the new animation and high-end television tax reliefs is great news for the UK’s TV and animation production sector. 

“The new tax reliefs will be in place from 1 April giving production companies just about to start production the confidence to do so, knowing that they are going to be able to apply for the TV or animation tax relief providing their productions meet the qualifying criteria. 

“The final stages of the process are Royal Assent of the Finance Act 2013 in July and publication of the final guidelines in August.  

“In real terms the UK is now going to be able attract more high-end TV production and animation building businesses and employment.”

Adrian Wootton, chief executive of the British Film Commission and Film London said: “This is fantastic news for the industry. That the TV tax relief is in place just a year after it was announced is testament to the Government’s understanding of how vital the production industries are to the UK economy in terms of job creation and investment.

“Building on the success of the film tax relief, the British Film Commission is already working hard with our partners both here and in the US to ensure that the UK has as much success in attracting major international TV production as we do in attracting major international features.”

Video games credit delay

State aid approval has not yet been received for the video games tax relief, which was also expected to apply from 1 April, meaning that the start date for this relief will be delayed.

Rachel Austin, tax director at Deloitte tax director, said: “While it was always acknowledged that obtaining state aid approval for the video games relief might take longer, the video games industry will be disappointed to see a delay in the introduction of the relief.

“The video games industry bodies have announced their intention to work closely with the Government and the European Commission to obtain approval for the relief as soon as possible.”