UK overhauls film & TV tax relief, with ‘meaningful amount’ being returned to big budget shows

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Industry insiders have welcomed the overhaul of the UK’s film & TV tax relief scheme, which will result in a “meaningful amount” being returned to big budget shows while the minimum threshold for spending remains unchanged at £1m ($1.1m).

The Audio-Visual Expenditure Credit (AVEC) scheme, unveiled as part of UK chancellor Jeremy Hunt’s budget, will come into effect in January 2024 and will offer 34% tax relief on film & high end TV (HETV).

The current rate stands at 25%, but is calculated on taxable profit.

The new AVEC scheme will be calculated on qualifying expenditure instead. Full details have not been revealed but most industry watchers expect it will deliver an improvement on the current scheme.

Jeremy Roberts, head of film & TV at UK law firm Sheridans, told TBI the changes were “a very good result” for the UK screen sectors.

“The headline increase in the credit rate for film and high-end TV leads to a slightly higher rate than would have applied under the current regime. It’s a small increase, 0.66%, but that’s still a meaningful amount on a large budget production.”

Children’s and animation programming will have a credit rate of 39%, while video game production will stand at 34%.

The overhaul means three TV-related tax relief schemes – the High-End Television Tax Relief, the Animation Tax Relief and the Children’s TV Tax Relief – will now fall under the AVEC umbrella.

Sherwood

The Film Tax Relief scheme will also fall under AVEC, while the Video Games Tax Relief scheme will become the Video Games Expenditure Credit.

Threshold relief

UK producer body Pact supported the changes and said it “welcomed the outcome” of its recent public consultation.

Ben Roberts, CEO at the British Film Institute (BFI), added that the changes “will ensure the UK remains a truly globally competitive production hub, giving us economic recovery and growth, creating thousands of jobs for people up and down the country and enabling creative talent and storytelling to thrive.”

The BFI chief said that it was “good news” that the HETV threshold had been preserved at £1m per hour, echoing the thoughts of many producers, after reports suggested that UK chancellor Hunt was considering raising the minimum spend.

Hunt also confirmed:

• Minimum slot length for HETV is to be reduced to 20 minutes from 30 minutes
• HETV spend will also be applied on an episode-by-episode basis
• An 80% cap on qualifying expenditure is applicable to AVEC
• Premium docs will be able to claim, with a definition of a documentary set to be put into legislation. This will be based on guidance used by the BFI
• Film and TV programmes that have not concluded principle photography, and video games in development, on 1 April, 2025 may continue to claim the existing tax reliefs until 31 March, 2027

‘Maintaining momentum’

Hunt said the changes would provide “even more momentum to this critical sector”, while Pact said it was “pleased” with the changes to the children’s and animation scheme, having presented a “substantial report” to government.

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The new scheme should, Pact added, “help stimulate investment in children’s and animation content and build on the success of the existing tax credit.”

“We are also pleased that the Government has listened to concerns raised by both Pact and UK broadcasters about raising the minimum expenditure threshold for HETV tax relief,” the trade body added.

Sheridans’ Roberts said the changes offered “certainty” to both producers and buyers at a time when streamers are “looking to dial down their spend on original content”, ensuring the country “is well positioned for an increasingly competitive global marketplace.”

Adrian Wootton, chief exec of the British Film Commission (BFC) added that the overhaul was “real recognition from the government of the growth and opportunity our UK film and high-end TV industry presents”.

“While much of the detail is yet to be worked through, today’s announcement demonstrates a strong commitment from government to continuing to support the growth of our film and TV sector, creating jobs and opportunities in all four UK nations and region for years to come.”