Running a creative business means juggling big ideas, tight deadlines, and sometimes unpredictable income. Tax might not be the most exciting part of your business, but a few smart moves can make a huge difference to your bottom line.
Here are ten practical tax tips tailored for creative companies — each with a handy “watch out for” to help you steer clear of pitfalls.
Software subscriptions, design equipment, travel to shoots, props, and even part of your home office costs — they can all be claimed as business expenses.
💡 Watch out for: claiming personal costs. That Adobe licence you use for your side hustle is fine, but your Netflix subscription? HMRC won’t be amused.
If you buy expensive kit — cameras, computers, studio equipment — you can usually claim 100% tax relief in the year of purchase.
💡 Watch out for: items bought personally. If you pay with your own card but want the company to claim, you’ll need to reimburse yourself properly and keep the paperwork.
If your agency or production company is doing innovative work — maybe developing a new animation process, app, or software — you might qualify for valuable R&D tax relief.
💡 Watch out for: thinking R&D only applies to scientists in lab coats. But also beware of pushy “R&D specialists” promising the earth — HMRC are clamping down on dodgy claims.
Want to treat your team to coffee, cinema vouchers, or birthday gifts? You can provide tax-free perks up to £50 per head, provided they’re not cash and not a reward for work done.
💡 Watch out for: directors of close companies (like most small creative businesses) — your own limit is capped at £300 a year.
For directors/shareholders, it’s often more tax-efficient to take a small salary and top up with dividends.
💡 Watch out for: overdoing dividends without checking distributable profits. Paying out more than your company has available can land you in hot water.
Crossing the VAT registration threshold isn’t the end of the world — it can even help your cashflow if most of your clients are VAT-registered. Schemes like the Flat Rate Scheme can also simplify things.
💡 Watch out for: international work. Supplying services to overseas clients (like US production companies) can have very different VAT rules — don’t assume UK rules always apply.
If you’re incorporating from a sole trade or partnership, you might be able to transfer equipment, IP, or goodwill into your new company tax-efficiently.
💡 Watch out for: inflating values. HMRC could challenge any unrealistic figures you stick on “goodwill” or intellectual property.
Film, animation, high-end TV, and video game companies may qualify for specialist reliefs that reduce Corporation Tax or even bring in a payable credit.
💡 Watch out for: missing deadlines. These reliefs often require advance applications or certificates from bodies like the BFI — don’t leave it until your accountant is preparing your year-end accounts.
Company pension contributions are usually tax-deductible and can be a smart way to take money out of the business while planning for the future.
💡 Watch out for: annual and lifetime allowance limits. Go over them and your tax saving could vanish.
Using cloud bookkeeping software like Xero or FreeAgent not only makes VAT and year-end compliance easier, but it also helps you see your real-time financial position.
💡 Watch out for: relying solely on bank statements. HMRC require proper invoices and receipts — make sure you’re saving them (scanned copies are fine).
Tax doesn’t have to be dry. With a little planning and a few smart strategies, you can keep more money in your business — or, even better, more money in your pocket.