From 1 April 2025, companies will be able to claim an enhanced 39% rate of Audio Visual Expenditure Credit (AVEC) on their UK visual effects (VFX) costs. This will rise from the current rate of 34%.
The AVEC’s 80% cap on qualifying costs will also be removed for UK VFX costs, and qualifying VFX costs incurred from 1 January 2025 will be eligible.
Qualification and the claims process
The definition of VFX is deemed to be “work consisting of the use of computer technology to create or alter images for inclusion in the film or programme”.
The additional tax relief will only be available to companies when the production has received a final certificate from the British Film Institute (except where the project is abandoned).
This means claims can only be made for the completion period (or a subsequent period). The completion period is the accounting period when the production is completed.
For interim periods, the company will still be able to claim the normal 34% rate of AVEC, including the VFX costs. Claims will have to be accompanied by evidence of qualifying expenditure.
This latest tax break aims to incentivise inward investment and improve the competitiveness of the UK’s VFX businesses working within the film, TV, animation and video games sectors. Find out more on the government’s gov.uk website or by chatting with one of our team of experts.
Can we help?
We are currently helping film, high-end TV, children’s TV and animation companies understand the impact of the visual effects tax relief on their productions. Our track record in enabling businesses in the broadcast industry to successfully claim the relevant tax reliefs means we are well-placed to answer your questions.
Contact one of our team of specialists on t: +44 (0)20 7312 0000 or e: Steve Joberns, Gurvir Cheema, Lauren Gilman
Specific advice should be obtained before taking action, or refraining from taking action, in relation to this summary. If you would like advice or further information, please speak to your usual Shipleys contact.
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