British film, TV and video game producers will benefit from new,
more generous tax credits that start today (1 January 2024).
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.
, Financial Secretary to
the Treasury, said:
“We are backing the makers of the next Barbie, Happy Valley and
Grand Theft Auto with this new, more generous, tax credit system
for British production talent.
“The UK is a world leader in creativity, and we want to ensure
that continues well into the future by making it easier for
British film, TV and video games to thrive.”
Under the new system, a children’s TV production, animated TV
production or film with £1 million of qualifying expenditure will
receive an additional £42,500 in relief. A high-end TV
production, film production or video game will receive £5,000 in
relief. To ensure fairness, the uplift in relief for animation
will be extended to include animated films as well as TV
programmes.
The credits will be calculated directly from a production or
game’s qualifying expenditure, instead of being an adjustment to
the company’s taxable profit.
Animation and children’s TV productions will be eligible for a
higher credit rate of 39%, a rate increase of 5.5% under the
previous reliefs. The 34% credit rate for film, high end TV and
video games is roughly equivalent to a rate increase of 0.5%
under the previous tax reliefs.
The new system applies to the whole of the UK. The government has
listened to feedback from industry that companies will need
sufficient time to adapt to the new expenditure credits. For this
reason, productions and games in development on 1 April 2025 may
continue to use the previous tax reliefs until they end on until
1 April 2027.
The move to reform tax relief for entertainment productions and
video games was announced at the Spring Budget in March 2023. The
system implemented today was developed hand in glove with the UK
entertainment industry, with consultations on both the policy
itself and the draft legislation. It is being legislated as part
of the Finance Bill 2023-24.
The UK’s creative industry is already worth £126bn and the UK has
the largest video game employee base in Europe, at nearly 21,000
by the last estimate.
Today’s new tax credit system is the latest move by UK Government
in support for British creative industries. The Chancellor also
announced that full-expensing will be made permanent in 2023’s
Autumn Statement, helping creative businesses invest for the less
by saving them 25p in every £1 they spend on qualifying equipment
and machinery.
At Spring Budget 2023, the Chancellor also extended the rates of
relief for theatre, orchestra and museums for two additional
years to April 2025.
In September last year, coinciding with a visit by the Chancellor
to Warner Bros. Studios in Los
Angeles, it was announced that the production giant would expand
their studio in Leavesden, Hertfordshire, in 2024. The move is
expected to create 4,000 new jobs in the UK and contribute more
than £200m to the UK economy.
Notes to editors
- Qualifying expenditure will remain broadly unchanged. For the
Video Games Expenditure Credit, to align the conditions for video
games with film and TV, at least 10% of expenditure has to be
‘used or consumed’ in the UK.
- At Spring Budget 2023, the Chancellor also extended the
higher 45% (for non-touring productions) and 50% (for touring
productions) rates of relief for theatre, orchestra and museums
for two additional years to April 2025.
