Consultation on additional tax relief for visual effects expenditure

The Government seeks views on the proposed increase in tax relief within Audio-Visual Expenditure Credit for UK visual effects (VFX) costs

Government consults on proposed tax relief increase within Audio-Visual Expenditure Credit

At Spring Budget 2024, the Government announced that UK visual effects (VFX) costs in film and high-end programmes will receive a 5 percent increase in Audio-Visual Expenditure Credit (AVEC).

UK VFX costs will also be exempt from the 80 percent cap on qualifying expenditure, further boosting the tax benefit on UK VFX costs. These changes will take effect from 1 April 2025.

The Government intends to use the British Film Institute’s definition of visual effects as a starting point, being defined to mean the digital alteration of a film or high-end TV programme’s images. Costs in relation to special effects, generative artificial intelligence, animated TV, and animated films will specifically be excluded from the additional relief, however, visual effects incurred in virtual production will be eligible.

The additional relief aims to support the growth and competitiveness of the UK VFX industry, which is a key contributor to the creative economy and a driver of innovation and skills. The relief may also enhance the attractiveness of the UK as a location for VFX production and encourage more investment and collaboration.

The Government has published a consultation document setting out in detail how the additional tax relief will work and what type of costs will be in scope. We will be responding to the consultation and encourage businesses within the film and high-end TV sectors as well as visual effects studios to also share comments on the proposed policy design and the types of costs that will qualify. The consultation closes on 22 May 2024.