UK Film & TV Tax Relief - the basics
(AVEC) Audio Visual Expenditure Credit
For all British qualifying films of any budget level, the Film Production Company (FPC) can claim a payable cash rebate of up to:
Film tax relief: 25% on UK qualifying expenditure.
AVEC: 25.5% for live action feature films and 29.25% for animated feature films. 39.75% for films qualifying for the IFTC.
Under the AVEC, from 1 April 2025, qualifying VFX costs will benefit from a net rate of 29.25% in respect of expenditure incurred on or after 1 January 2025.
The tax relief is capped at 80% of the core expenditure i.e. even if you have 100% UK-qualifying expenditure, tax relief is only payable on up to 80%
To qualify for Film or High End TV , projects must:
Have a minimum 10% of core expenditure spent in the UK
Have one FPC or TPC registered as a UK Limited Company with Companies House and set up before shooting begins
The FPC/TPC must be responsible for all activity from pre-production through to completion
Must qualify as British via the Cultural Test or be an official co-production
Low Budget - (IFTC) Independent Film Tax Credit
The IFTC allows eligible companies to claim an enhanced Audiovisual Expenditure Credit (AVEC) at a rate of 53% on their qualifying expenditure. To qualify for IFTC, films certified as British Films must meet both:
The budget condition. The total core expenditure in relation to the film must not exceed £23,500,000.
The creative connection condition
The film must have a director or scriptwriter who is a British Citizen or ordinarily resident in the UK, or be an official UK co-production.
If a film has multiple directors and/or scriptwriters, the creative connection condition can be satisfied by reference to any lead director or lead scriptwriter.
Qualifying expenditure will be capped at a maximum of 80% of a film’s total core expenditure. The taxable credit for a film will be capped at £6.36 million.
If an international production company is bringing a foreign crew to the UK to take part in a ‘location shoot’, then they may be able travel and enter as visitors. The immigration rules for visitors state that: “Film crew (actor, producer, director or technician) employed by an overseas company may visit the UK to take part in a location shoot for a film or programme or other media content that is produced and financed overseas.” *If a crew member is a ‘visa-national’ they will need to apply for (and be granted) a visitor visa before travelling to the UK; this may include attending a biometric appointment.
To qualify for creative industry tax reliefs, all films, television programmes or video games must be certified as British. They must pass a cultural test or qualify through an internationally agreed co-production treaty. The Cultural Test for film is points-based, with sections relating to content, cultural contribution, location, and cast and crew. Projects need to achieve at least 18 from a possible 35 points.
The sections are:
Cultural content - up to 18 points
Cultural contribution - up to 14 points
Cultural hubs - up to 5 points
Cultural practitioners - up to 8 points
The “Golden Points Rule”
This applies if a film scores all 19 of the points available in sections A4 (language), C (where work is carried out), and D (personnel). However, the Golden Points Rule means the film cannot pass the Cultural Test unless it scores a minimum amount in certain other parts of the test. To pass, it must have scored two or more points in section A1 (setting) and/or two or more points in section A2 (characters) and/or 4 points in section A3 (story). See Annex C for a flowchart explanation of the Golden Points Rule.
Tax relief claims
Info you will need
core costs on the production for the claim period
total core costs on the production to date
amount of total core costs that are UK costs
value of additional deductions made in previous periods if any
amount of loss surrendered if any
amount of credit you’re claiming for the production if any
Expenditure credit claims
Info you will need
relevant global expenditure on the production for the claim period
total relevant global expenditure on the production to date
amount of total relevant global expenditure that are UK costs
qualifying expenditure for previous periods if any
amount of credit you’re claiming for the production
amount used at each step of the credit redemption process
The relevant global expenditure is the amount of core expenditure minus any excluded expenditure.
Foreign Performers with holding tax
If you pay someone who does not live in the UK for making an appearance or performing in the UK, you must deduct tax if the total payment exceeds the personal tax allowance threshold.
Core expenditure
These are the costs you incur for your high-end television programme on: (1) pre-production (2) principal photography (3) post-production
UK expenditure
These are the costs you incur on goods or services that are used or consumed in the United Kingdom.
AT A GLANCE
(AVEC) Audio Visual Expenditure Credit
In 2024, the four UK screen sector tax credits for film, high-end TV, children’s TV and animation, were modernised and combined into a single tax system. This is now the AVEC.
(IFTC) Independent Film Tax Credit
The rate of relief on films with budgets less than £15 million has been increased to 53% which equates to 39.75% net after tax.
(FPC) Film Production Company
(VGEC) Video Games Expenditure Credit
(HETR) High-End TV Tax Relief
(ATR) Animation Tax Relief
(CTR) Children’s TV Tax Relief
(DCMS) Department of Culture, Media and Sport
RESOURCES