The government is committed to supporting the creative industries and it is intended that creative sector tax reliefs will help support growth in digital, creative industries and the arts.
The government is committed to supporting the creative industries and it is intended that creative sector tax reliefs will help support growth in digital, creative industries and the arts.
There are eight creative industry reliefs that allow qualifying companies to receive a cash benefit based on the qualifying expenditure that they incur. This is provided either by reducing the company’s corporation tax liability or by providing a payable credit if there is no tax liability. Overall, the benefits of each relief is up to c.20% of the qualifying expenditure incurred, although it is slightly higher for some industries under new rules (please see below).
The creative industry tax reliefs provide relief for the creation of the following:
- Films
- High-end television shows
- Children’s television shows
- Animations
- Video games
- Theatrical productions
- Museum or gallery exhibitions
- Orchestral concerts
Each relief has its own criteria and detailed rules that apply to enable a company to claim. For many of the reliefs a ‘culturally British’ certificate is required for each production in order to qualify. This is a points based system, looking at a number of factors and is administered by the British Film Institute (BFI).
Audio Visual Expenditure Credit & Video Games Expenditure Credits
From 1 January 2024, new reliefs have been introduced called the Audio-Visual Expenditure Credit (AVEC) and the Video Games Expenditure Credit (VGEC). AVEC covers film, high-end TV, Children’s television and Animation productions and VGEC video games tax relief. The AVEC and VGEC are intended to be ‘Qualified Refundable Tax Credits’ for the OECD Pillar 2 rules.
These new reliefs provide a taxable ‘above the line’ credit of 34% for films, high-end television shows and video games and 39% for animations and children’s television shows providing net cash benefits of c.20% and c.23% respectively. The AVEC and VGEC can either reduce the amount of tax payable by the company or be a payable credit to the company where the company isn’t paying tax.
From 1 April 2027, these reliefs will fully replace their previous regimes, where there are currently transitional rules in place for companies to potentially claim either the ‘old’ reliefs or the AVEC / VGEC up until this date.
How we can help
- Work with you to assess whether you are eligible for any of these reliefs based on the legislation.
- Prepare claims to meet the requirements of HMRC.
- Discuss with you and model the impact of the new changes for the AVEC or VGEC.
- Help you obtain the required BFI certificates to support your claims.
