A new tax relief system for the UK's animation, film, TV and video games industries has been recently rolled out in the UK. The Audio-Visual Expenditure Credit (AVEC) and the Video Games Expenditure Credit (VGEC) aim to expand the UK's creative industry and drive economic growth.
The new system has been designed to incentivise British companies to keep production within the UK, rather than move it overseas, due to more attractive tax breaks. The reform includes clear improvement for the industry. For example, tax credits are now calculated off qualifying expenditure irrespective of the production budget (capped at 80%), unlike the previous system, which saw adjustments to companies' taxable profits. As a result, players in the creative industries are now entitled to more tax relief.
In order to qualify for creative tax reliefs in the UK, production companies must be certified as British via a cultural test, or as an official British co-production - The BFI website provides helpful, detailed information about how to access this tax relief - bfi.org.uk.
Having recently spoken to several professionals within the field, at various film industry events, I am well aware of the challenges that are often faced in the development of creative projects. It is very encouraging to see that the creative industries continue to be recognised as key contributors to the country's economic growth by the UK government. This reform will hopefully see a boost in British production, which as a member of our Entertainment & Creative Industries sector group, I am quite looking forward to witnessing.
To maximise the potential of the UK's cutting-edge production industry and help incubate unique British talent, the government's Audio-Visual Expenditure Credit and the Video Games Expenditure Credit replace the previous tax reliefs for film, TV and video games. All companies will receive more tax relief than they did under the previous system, greater flexibility over production decisions and greater clarity about the amount of credit companies can expect to receive.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
