New tax credits for film, TV and video game makers

Changes to the audio-visual creative tax relief system

From 1 January 2024, the Audio-Visual Expenditure Credit and Video Games Expenditure Credit have replaced the previous tax reliefs for film, TV and video games production.

Under the new and improved system, all companies will receive:

• more tax relief than they did under the previous system
• greater flexibility over production decisions
• greater clarity about the amount of credit companies can expect to receive

Under the new system, a children's TV production, animated TV production or film with £1 million of qualifying expenditure will receive an additional £42,500 in relief.

A high-end TV production, film production or video game will receive £5,000 in relief.

To ensure fairness, the uplift in relief for animation will be extended to include animated films as well as TV programmes.

The credits will be calculated directly from a production or game's qualifying expenditure, instead of being an adjustment to the company's taxable profit.

Animation and children's TV productions will be eligible for a higher credit rate of 39%, a rate increase of 5.5% under the previous reliefs. The 34% credit rate for film, high end TV and video games is roughly equivalent to a rate increase of 0.5% under the previous tax reliefs.

The new system applies to the whole of the UK.

The government has acknowledged that businesses will need time to adjust to the new rules. For this reason, productions and games in development on 1 April 2025 can continue using the old tax reliefs until they end on 1 April 2027.

First published 2 January 2024