BFI welcomes enhanced VFX tax credit for UK film and high-end television productions

The BFI today welcomed the introduction of an enhanced 39% rate (29.25% after tax) of Audio-Visual Expenditure Credit (AVEC) for UK visual effects work on film and high-end television productions, announced today in the Chancellor of the Exchequer’s first Autumn Budget.

The additional tax relief for visual effects will come into effect 1 April 2025; costs incurred from 1 January 2025 will be eligible. In addition to the enhanced rate of relief being an increase on the previous rate of 25%, UK visual effects costs will also be exempt from the AVEC’s 80% cap on qualifying expenditure. This measure was announced in this year’s Spring Budget and it will be legislated in the Finance Bill 2024/25.

It is also an intervention that the BFI and the sector have long campaigned for and will help attract and retain visual effects work in the UK in an increasingly competitive international landscape.

“Today’s Budget announcement introducing additional tax relief for visual effects work in the UK is great news for our industry and wider creative industries within a highly competitive sector internationally,” said Ben Roberts, BFI Chief Executive. “The UK is proud to be home to some of the world’s most innovative and creative visual effects companies generating jobs in a field that unites creativity and digital innovation. We also welcome the government’s £3m investment in expanding opportunities for young people to consider a career in the creative industries and the £25m funding that will be supporting the north-east’s Crown Works Studio. Collectively these measures demonstrate confidence in our sector’s capability to grow its contribution to the creative industries and the UK economy.”

The measures announced today include:

• plans to invest £3 million in expanding the Creative Careers Programme giving school children the opportunity for young people to to learn more about career routes and consider a career in the creative industries;
• £25 million of funding for the North East Mayoral Combined Authority (NEMCA) which will invest it in Crown Works Studio, supporting the north east’s creative industries and anticipated to create around 8,000 new jobs in the region;
• transforming the Apprenticeship Levy into a more flexible Growth and Skills Levy by investing £40 million to help to deliver new foundation and shorter apprenticeships;
• continuation of funding for the Create Growth Programme and the UK Games Fund; and
• a permanent decrease in business rates from 202/2027 for retail, hospitality and leisure properties (RHL), including cinemas. In addition, for 2025/2026, RHL properties will receive 40% relief on the amount of business rates tax they have to pay.

Earlier this month the government announced that Statutory Instrument for the Enhanced AVEC for Lower Budget Film/independent Film Tax Credit (IFTC) had been fully legislated. Warmly received by the industry, the IFTC means that from 1 April 2025, UK films with a total core expenditure of under £15 million are eligible for a relief of 53% on qualifying expenditure. Films with a total core expenditure of up to £23.5 million can qualify, however can only claim on up to a maximum of 80% of £15 million of the core expenditure.

Details about the IFTC, guidance notes, application forms and a leaflet are published online. The BFI’s Certification Unit can now accept applications for the Enhanced AVEC/IFTC.