Starting January 1, 2025, VFX expenditure under the AVEC will benefit from a substantial uplift in tax rebates, increasing from 25.5% to 29.25% net after tax. This rebate is exempt from the overall 80% cap on the total budget eligible for UK tax relief.
This enhancement allows productions to claim:
- 25.5% tax relief on filming and non-VFX costs in the UK (up to 80% of the total budget).
- 29.25% rebate on VFX expenditure, regardless of whether this spend pushes the UK expenditure above the 80% cap.
All VFX activity must be carried out in the UK, and projects must meet the AVEC qualification criteria to benefit from this uplift.
Support for Limited Budget Films
For smaller productions, a new tax credit known as the Indie Film Tax Credit (IFTC) was introduced in 2024 for films with budgets under £23.5 million. Despite its nickname, this credit is available to both independent films and lower-budget studio productions.
- Tapered relief: Projects with budgets exceeding £15 million see relief tapered.
- Maximum rebate: Up to £4.77 million can be claimed under the IFTC.
While the VFX uplift cannot be combined with the IFTC or animation tax credits, VFX and post-production expenses on films claiming the IFTC remain eligible, offering a rebate of up to 39.75%. However, productions exceeding the 80% cap on total eligible UK expenditure or the £4.77 million cap will see reduced rebates.
For films with budgets between £18 million and £23.5 million, transferring to the AVEC could provide a better financial outcome, particularly for those with significant VFX expenditures. The uplift’s exemption from the 80% cap could lead to higher overall rebates.
What This Means for the Industry
These changes aim to strengthen the UK’s position as a leading global hub for VFX and post-production work. With enhanced tax reliefs and flexible qualification criteria, both large-scale blockbusters and smaller productions can significantly benefit from conducting their post-production and VFX in the UK.
