What the latest budget announcements mean for the creative sector

The creative industries continue to be a vibrant cornerstone of the UK economy, making substantial contributions across film, television, video games, music, and digital arts. In Brighton, known for its thriving creative scene, the recent budget announcements have sparked conversation about what the changes mean for businesses in this dynamic sector. While the recent headline announcements focused on national economic recovery and tax there are particular areas of interest for creative businesses.

Supporting creative businesses with tax reliefs

One of the more favourable aspects of the budget for the creative sector relates to the government's continued support for tax reliefs tailored to this industry. For video game developers, film producers, and other eligible creative businesses, tax incentives such as Video Games Tax Relief (VGTR) and the Creative Industry Tax Reliefs have been instrumental in driving growth and innovation. The budget reaffirmed these reliefs, but it is essential for businesses to remain vigilant regarding any regulatory updates, including stricter compliance checks and adjustments to the claims process.

Where Special Purpose Vehicle companies (SPVs) have been set up to maximise VGTR claims, taxpayers must tread carefully. The government has reiterated the need for SPVs to be formed with genuine commercial purposes, not solely for tax advantages. Creative businesses should consult with knowledgeable advisors to ensure compliance and demonstrate the broader business intent behind their corporate structures.

Capital gains tax changes and impact on creative entrepreneurs

Changes to Capital Gains Tax (CGT) rates, as announced in the budget, will affect business owners considering exits or asset disposals. For creative entrepreneurs with stakes in their own businesses, the increase in the main CGT rates to 18% (for basic rate taxpayers) and 24% (for higher rate taxpayers) for disposals after 30 October 2024 will require careful planning. Furthermore, the rate for Business Asset Disposal Relief and Investors’ Relief is set to rise to 14% from 6 April 2025, before aligning with the main lower rate at 18% from 6 April 2026. Creative founders and investors should evaluate their long-term exit strategies and seek tailored advice on how to navigate these changes while maximising value.

Tackling employment and workforce costs

Many creative businesses rely heavily on freelancers and contractual talent, which makes the landscape of employment taxes and contributions particularly significant. The budget’s updates to Employers' National Insurance Contributions and potential reforms around contractor engagements warrant close attention. Any adjustments in these areas could have far-reaching implications for businesses that depend on a flexible, skilled workforce.

Navigating inflation and economic challenges

The creative sector, while resilient, is not immune to broader economic challenges such as inflation and rising costs. The budget outlined measures to support businesses through economic turbulence, including energy relief schemes and potential adjustments to government-backed loans. Creative businesses should consider how they can tap into these measures to maintain cash flow and keep growth plans on track during periods of financial uncertainty.

Maintaining innovation amidst changing regulation

The budget’s focus on strengthening regulatory frameworks—such as consultations on crypto assets and updates to research and development tax reliefs—signals a move towards greater oversight and compliance. For creative businesses that innovate, particularly in areas like digital arts, immersive technologies, and gaming, staying ahead of regulatory changes is critical. The government's commitment to consulting on improved compliance processes offers a chance for businesses to engage and shape policy in a way that reflects industry needs.

Final thoughts

The creative sector is a powerhouse of innovation and culture, and the budget's latest announcements underscore the importance of striking a balance between supporting growth and ensuring compliance. For creative businesses in Brighton and beyond, the key will be to stay informed, plan strategically, and seek advice to navigate this evolving landscape.

At Plus Accounting, we specialise in guiding creative businesses through these complexities, from maximising tax reliefs to managing compliance and planning for sustainable growth. If you'd like to discuss how these changes impact your business, reach out to us for expert guidance tailored to your needs. 

Thank you to Vicky King and Plus Accounting for this useful write-up. 

Plus Accounting are sponsors of the next Big Debate on 28 November, where we'll be discussing the power of Brighton's creative sector. Join the waitlist here.

If you want to contribute to the Chamber blog, contact us on hannah@brightonchamber.co.uk