October 31, 2024 – In a significant move for the U.K.’s visual effects (VFX) and film industry, the government has introduced new tax incentives to bolster VFX work within the country. Beginning on April 1, 2025, production companies will be eligible to claim an enhanced 39% rate of the Audio-Visual Expenditure Credit (AVEC) on U.K.-based VFX costs, up from the current 34%. Additionally, the previous 80% cap on qualifying costs will be removed specifically for VFX expenses, allowing productions to maximize their eligible expenditures.
To qualify for this enhanced tax relief, productions must hold a final certificate from the British Film Institute, ensuring that the credit is reserved for legitimate productions. Claims will apply only to completed or subsequently completed periods of production, though companies may still claim the standard 34% AVEC rate on VFX costs for interim periods.
The enhanced 39% AVEC rate and elimination of the 80% cap aim to position the U.K. as a competitive destination for international VFX investment, promoting local industry growth while ensuring that funds are used appropriately. The policy was first announced in March 2024, followed by a design consultation from March to May of 2024, and has been shaped by input from the industry, as summarized in the Autumn Budget of 2024.
These changes will apply to costs incurred from January 1, 2025, with companies eligible to file claims under the new rate beginning in April. The additional relief will require companies to maintain detailed records of qualifying VFX expenses to support their claims, with further guidance expected before the policy’s implementation.
This expanded relief reflects a broader strategy to secure U.K.’s position as a leader in film and television VFX production by making the sector more attractive to both domestic and international projects.
