The UK's creative sector tax reliefs went through their most significant restructure in over a decade with the Audio-Visual Expenditure Credit (AVEC) and Video Games Expenditure Credit (VGEC) replacing the legacy film, high-end TV, animation, children's TV, and video games reliefs. AVEC is mandatory for accounting periods starting on or after 1 April 2024 for new productions, and from 1 April 2025 the old reliefs were closed entirely. We have submitted several dozen claims under the new regime. Here is how it works.
From deduction to expenditure credit
The old reliefs were deductions: companies claimed an enhanced deduction against profits, with a payable credit in loss-making positions. AVEC and VGEC are above-the-line expenditure credits, similar in design to the merged R&D scheme. The credit appears as taxable income and is set against the corporation tax liability, with a payable element where credits exceed tax.
The headline rates
- AVEC for film and high-end TV: 34% credit on qualifying expenditure.
- AVEC for animation and children's TV: 39% credit.
- AVEC enhanced for animated film and TV: 39%.
- Independent Film Tax Credit (IFTC): 53% credit for qualifying lower-budget British films (introduced 2024).
- VGEC for video games: 34% credit.
The net cash value after corporation tax is typically around 25.5p per GBP 1 of qualifying expenditure for the standard 34% rate.
Qualifying productions
For film and high-end TV under AVEC:
- The production must pass the cultural test administered by the BFI, or qualify as a co-production under an applicable treaty.
- At least 10% of core expenditure must be on UK activities.
- The production must be intended for theatrical release (film) or broadcast (TV) and meet minimum slot length and per-hour expenditure requirements (TV).
For video games under VGEC:
- The game must be developed for supply to the public.
- It must pass the cultural test administered by the BFI.
- At least 10% of core expenditure must be incurred on UK activities (replacing the old "European" expenditure requirement under VGTR).
Independent Film Tax Credit: the headline change
The IFTC, introduced in Spring Budget 2024 and live from 1 April 2025, provides a 53% credit on qualifying expenditure for films with a total core expenditure of GBP 15m or less. The film must have a UK lead writer or director, or be certified as an official co-production. The credit applies to qualifying expenditure up to GBP 15m, with the credit value capped accordingly.
For a GBP 8m independent feature, the IFTC delivers approximately GBP 3m of credit value, with net cash of around GBP 2.25m. This has materially shifted the economics of independent British film production.
Cultural test and BFI certification
Productions must obtain a BFI certificate (interim or final) to claim. The cultural test scores against four categories: cultural content, cultural contribution, cultural hubs, and cultural practitioners. Productions must score 18+ out of 35 points (or 16+ for video games under VGEC).
For films and TV, we apply for interim certificates early in production to give confidence to financiers, then a final certificate before claim submission. For video games, interim certificates can be applied for in respect of in-production games, with final certificates after completion.
The qualifying expenditure rules
Qualifying expenditure is "used or consumed" in the UK. From 1 April 2024, the AVEC and VGEC frameworks restrict relief to expenditure on UK goods and services. This is narrower than the previous "European expenditure" basis for video games. Studios with established EU pipelines have had to restructure spend allocation.
Eligible costs include:
- Pre-production and development.
- Principal photography and production.
- Post-production: editing, VFX, sound design.
- Crew costs where work is performed in the UK.
- Equipment, facilities, and location costs in the UK.
Distribution, marketing, and exploitation costs are not qualifying.
Theatre, orchestra, and museums tax reliefs
These remain separate from AVEC. The Theatre Tax Relief, Orchestra Tax Relief, and Museums and Galleries Exhibition Tax Relief continue, with permanent rates set at 40% for non-touring productions and 45% for touring productions from 1 April 2025 (reduced from the temporary uplift rates that applied during the pandemic recovery).
The claim submission process
From August 2023, all creative sector claims require an Additional Information Form similar to R&D. We submit:
- A description of the production and how it qualifies.
- The BFI certificate.
- A line-by-line breakdown of UK vs non-UK expenditure.
- Cost ledgers reconciled to the production's books.
- The CT600 corporation tax return claiming the expenditure credit.
How PushDigits supports creative companies
We work with production companies, post houses, and video game studios on both compliance and capital structure. Our tax planning team sequences claims across multi-project pipelines. Business advisory covers production company structures, IP holding companies, and investor reporting. Book a creative sector session or visit our creative industries page.