UK to reform film and high-end TV tax reliefs with only marginal rise expected

UK to reform film and high-end TV tax reliefs with only marginal rise expected

The Crown

The UK is to reform its film and TV tax reliefs, introducing new expenditure credits with a headline rate of 34% for films and high-end TV programmes and 39% for animations and children’s TV programmes. The reform will change the way relief is calculated.

The expenditure credits will be calculated directly from qualifying expenditure instead of being an adjustment to the company’s taxable profit as under the existing regime.

Known as the Audio-Visual Expenditure Credit (AVEC), the new system will be modelled on government’s existing Research and Development Expenditure Credits.

At the time of writing, it is not yet clear whether the reforms will deliver a significant increase in tax relief for productions. The current tax credit for film and TV stands at 25%. It is expected it may rise to 25.5%.

The UK chancellor Jeremy Hunt announced the changes in his annual Budget to parliament today, saying he wanted to give ”even more momentum to this critical sector.”

He said: “I will introduce an expenditure credit with rate of 34% for film, high end television and video games and 39% for animation and children’s TV sectors.”

Hunt also pledged to maintain the high-end TV tax relief minimum expenditure threshold at £1m, allaying producer fears that it may be raised. The government is also reducing the minimum slot length required for a high-end TV programme to be eligible for a tax credit to 20 minutes per episode.

The government is also introducing a Video Games Expenditure Credit (VGEC) with a headline rate of 34%.

Both models will have an 80% cap on qualifying expenditure.

The Treasury said companies can claim expenditure credits from accounting periods on or after January 1  2024 and from April 1 2025, claims for new film and TV productions and games must be made under the expenditure credits system.

The government also plans to allow high-end documentaries to claim for relief. It will put a definition into legislation based on the following guidance by the British Film Institute: a factual or realistic programme based on real events, place or circumstances and intended to record or inform.

The changes follow a 12 week consultation into UK audiovisual tax reliefs that launched after the autumn 2022 budget, which covered the five existing reliefs: Film Tax Relief (FTR), High-End Television Tax Relief (HETV tax relief), Animation Tax Relief (ATR), Children’s TV Tax Relief (CTR) and Video Games Tax Relief (VGTR). 

The first four will be merged into a single scheme, the Audio-visual Expenditure Credit, while the latter will become the Video Games Expenditure Credit.

A total of 63 written responses were submitted to the consultation and the government.

In his Budget speech, Hunt praised the film and TV industry as a major contributor to growth in the UK and noted that “only last month, Pinewood announced an expansion which will bring another 8,000 jobs to the UK.” 

He said: “Our film and TV industry has become Europe’s largest with our creative industries growing at twice the rate of the economy.”

Elsewhere in his Budget, Hunt also said that he would extend the current 45% and 50% reliefs to theatres, orchestras and museums for another two years, saying they do “such a brillaint job of attracting tourists to London and the UK.”


This article first appeared on our sister site, Screen. 


The Crown in production image via Des Willie/Netflix. 

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