A new tax credit system for film, TV and videogame production companies has launched at the start of 2024.
The government’s Audio-Visual Expenditure Credit and the Video Games Expenditure Credit replace the previous tax reliefs for film, TV and video games.
The government claims that 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.
“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,” said Nigel Huddleston, Financial Secretary to the Treasury.
“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.
Productions and games in development on 1st April 2025 may continue to use the previous tax reliefs until they end on 1st April 2027.
The UK’s creative industry is already worth £126 billion and the UK has the largest video game employee base in Europe, at nearly 21,000 by the last estimate.