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Overview of Changes

The UK is reforming its film, TV, and video games tax reliefs into expenditure credits. These changes, effective from January 1, 2024, introduce the Audio-Visual Expenditure Credit (AVEC) and the Video Games Expenditure Credit (VGEC).

Tax Relief and Expenditure Credits

• AVEC will replace film, high-end TV, animation, and children’s TV tax reliefs.
• VGEC will replace the Video Games Tax Relief (VGTR).

Rates:

• Film, high-end TV, and video games: 34% taxable credit (previously 25.5%).
• Children’s TV, animated TV, and animated film: 39% taxable credit (previously 29.25%).

Key Dates

• From January 1, 2024: Expenditure credits are available to claim.
• From April 1, 2025: New productions must claim under the new expenditure credits.
• From April 1, 2027: All productions must claim under the new expenditure credits, as the current tax reliefs will end.

Film Tax Relief

To access film tax relief, the production must:

• Pass the cultural test or qualify as an official co-production.
• Be intended for theatrical release.
• Have a minimum UK core spend requirement of 10%.

Details:

• Tax relief on the lower of either 80% of total core expenditure or the actual UK core expenditure.
• No cap on the claim amount.
• The production company must be within the UK Corporation Tax net.

High-End Television, Animation, and Children’s TV Tax Reliefs

Tax relief is available on the lower of either 80% of total core expenditure or the actual UK core expenditure, with no cap on claims.

High-End TV Requirements:

• Qualify as British by passing the cultural test or as an official co-production.
• Intended for broadcast.
• Be a drama, comedy, or documentary.
• 10% of core expenditure in the UK.
• Average core expenditure of £1 million per hour.
• Slot length greater than 30 minutes.
• Produced by a UK Corporation Tax net company.

Animation Requirements:

• Qualify as British by passing the cultural test or as an official co-production.
• Intended for broadcast.
• 51% of total core expenditure on animation.
• 10% of core expenditure in the UK.
• Produced by a UK Corporation Tax net company.

Children’s TV Requirements:

• Qualify as British by passing the cultural test or as an official co-production.
• Intended for broadcast.
• 10% of core expenditure in the UK.
• Produced by a UK Corporation Tax net company.
• Target audience under the age of 15.

Tax relief is available on the lower of either 80% of total core expenditure or the actual UK/EEA core expenditure, with no cap on claims.

Requirements:

• Qualify as British under the cultural test.
• Intended for release.
• 25% of core expenditure in the UK/EEA.
• Developed by a UK Corporation Tax net company.

• Films, HETV, animation, and children’s TV: 10% of production costs spent on UK qualifying expenditure.
• Video games: 25% of production costs spent on UK or EEA qualifying expenditure.

Definition:

• UK qualifying expenditure includes all production activities in the UK, such as pre-production, principal photography, and post-production, regardless of the nationality of personnel.

For queries on eligibility and claims, contact the HMRC Creative Industry Tax Unit at creative.industries@hmrc.gov.uk or call 0300 123 3440 (option 3).

Visit: https://www.bfi.org.uk/apply-british-certification-tax-relief/about-uk-creative-industry-tax-reliefs