Tax Relief and Expenditure Credits
The film, TV and video games tax reliefs are being reformed to expenditure credits.
- the Audio-Visual Expenditure Credit (AVEC) will replace the current film, high-end TV, animation and children’s TV tax reliefs
- the Video Games Expenditure Credit (VGEC) will replace the Video Games Tax Relief (VGTR)
Under AVEC / VGEC:
- film, high-end TV and video games will be eligible for a taxable credit at a rate of 34% (equivalent to 25.5% under the previous system)
- Children’s TV, animated TV and animated film will be eligible for a taxable credit at a rate of 39% (equivalent to 29.25% under the previous system)
Expenditure credits are available to claim from 1 January 2024.
New productions must claim under the new expenditure credits from 1 April 2025 and all productions must claim under the expenditure credits from 1 April 2027 when the current tax reliefs will end.
Read an overview of change from Tax Relief to Expenditure Credits.
Accessing film tax relief
Film tax relief is available for British qualifying films if they:
- either pass the cultural test or qualify as an official co-production
- are intended for theatrical release
- have a minimum UK core spend requirement of 10%, including those made under official co-production treaties
Tax relief is available on qualifying UK production expenditure on the lower of either 80% of total core expenditure or the actual UK core expenditure incurred.
There is no cap on the amount which can be claimed.
The film production company responsible for the film needs to be within the UK Corporation Tax net.
High-end television, animation and children’s television programme tax reliefs
Value of television programme tax reliefs
High-end television, animation and children’s television tax relief is available on qualifying UK core production expenditure on the lower of either 80% of the total core expenditure or the actual UK core expenditure incurred.
There is no cap on the amount that can be claimed.
Accessing high-end television (HETV) tax relief
In order to access HETV tax relief the programme must:
- qualify as British by either passing the High-end television cultural test or as an official co-production (with treaty partners that allow for television)
- be intended for broadcast (this includes the internet)
- be a drama, comedy or documentary – read a list of excluded programmes
- ensure at least 10% of the core expenditure takes place in the UK
- ensure the average core expenditure per hour of slot length is at least £1million per hour (pro rata)
- ensure the slot length for programme is greater than 30 minutes
- be made by a television production company within the UK Corporation Tax net
Accessing animation tax relief
In order to access the animation tax relief the programme must:
- qualify as British by either passing the animation cultural test or qualify as an official co-production (with treaty partners that allow for television)
- be intended for broadcast (this includes the internet)
- at least 51% of the total core expenditure is on animation
- at least 10% of the core expenditure must be UK expenditure
- be made by an animation production company within the UK Corporation Tax net
- not be one of the excluded programmes – read a list of excluded programmes
Accessing children’s television tax relief
In order to access children’s television tax relief the programme must:
- qualify as British by either passing the children’s television cultural test or qualify as an official co-production (with treaty partners that allow for television)
- be intended for broadcast (this includes the internet)
- ensure at least 10% of the core expenditure must be UK expenditure
- be made by a children’s television production company within the UK Corporation Tax net
- not be one of the excluded programmes – read a list of excluded programmes.
- have a primary target audience of the programme under the age of 15
Video games tax relief
Value of video games tax relief
Video games tax relief is available on qualifying UK/ European Economic Area (EEA) production expenditure on the lower of either 80% of the total core expenditure or the actual UK/EEA core expenditure incurred.
There is no cap on the amount that can be claimed.
Accessing video games tax relief
Video games must:
- qualify as British under the video games cultural test
- be intended for release
- have had at least 25% of core expenditure take place in the UK/EEA
- have been made by a video game development company within the UK Corporation Tax net
Minimum UK spend requirement
There is a minimum spend requirement for qualifying production expenditure which is different depending upon which tax relief you require.
Films, HETV, animation and children’s television programmes must have at least 10% of costs spent on UK qualifying production expenditure.
Video games must have at least 25% of costs spent on UK or EEA state qualifying production expenditure.
UK qualifying production expenditure is defined as expenditure incurred on production activities which take place within the UK including pre-production, principal photography, animation shooting, designing and producing and post-production.
This is irrespective of the nationality of the persons carrying out the activity.
For video games, this is extended to EEA state qualifying expenditure.
HM Revenue & Customs’ (HMRC) definition of UK spend introduces the concept of where a good or service is “used or consumed” in the UK.
If a good or service is used or consumed in the UK, expenditure is treated as UK expenditure under the rules set out in the clauses of the Finance Bill. If they are used or consumed outside the UK, they do not count as UK expenditure.
HMRC Creative Industry Tax Unit
HMRC have a unit who work specifically with the Corporation Tax affairs of companies which are eligible for one of the creative industry tax reliefs.
Any queries relating to eligibility for tax relief should be directed here.
Email creative.industries@hmrc.gov.uk.
Telephone: 0300 123 3440 – select option 3 for Creative Industry Tax Unit)
Read about creative industry tax reliefs for Corporation Tax
HMRC tax relief stencils
HMRC have provided tax relief stencils for each sector to help applicants to calculate their possible tax relief claim. The forms provide a useful checklist, links and additional criteria relevant to the particular sector.
If using the reformed incentives you will need to use the Audio-visual expenditure credit stencil (AVEC) or Video games expenditure credit stencil (VGEC). HMRC have also provided an Expenditure credit redemption stencil to calculate how credit due to the company is redeemed which covers both AVEC and VGEC.
The stencils are designed to help you to make your claim and provide the level of detail HMRC require to accurately review the claim in a timely manner. Please be aware that these are to be used as guides only and do not guarantee that the calculation of tax relief or expenditure credits will be given as other factors may need to be considered which HMRC will assess.
If you have any questions relating to these stencils or on eligible expenditure, please email creative.industries@hmrc.gov.uk.
Further guidance
Media lawyers and accountants can provide advice on British qualification and accessing UK tax relief.
Find contact information in the following UK production directories:
- The Knowledge
- KFTV (formerly Kemps)
- Kays