Behind many of the films and television dramas made in Britain sits a government incentive that rewards production spending in the UK. This article explains what the Audio-Visual Expenditure Credit is, which productions can use it, what the published rates are and how a claim is calculated.
What replaced the old film and TV tax reliefs?
For years, British film, high-end television, animation and children’s television were supported through separate tax reliefs. According to the BFI, those reliefs were replaced by expenditure credits that became available on 1 January 2024. The Audio-Visual Expenditure Credit (AVEC) covers film and television, while a separate Video Games Expenditure Credit covers games.
The BFI also notes a transition period. New productions had to claim under the new credits from 1 April 2025, and the older reliefs end on 1 April 2027, after which all productions must claim under expenditure credits. A credit is, in broad terms, calculated as a percentage of qualifying production spending, and claims are made through the Corporation Tax system.
Which productions can claim?
Not every programme qualifies. The BFI’s guidance sets out categories, each with its own conditions:
- Film: must qualify as British through the cultural test or as an official co-production, and be intended for theatrical release.
- High-end television: a drama, comedy or documentary intended for broadcast, including internet distribution, with a slot length of more than 20 minutes.
- Animation for television: at least 51% of total core expenditure must be spent on animation production.
- Children’s television: the primary target audience must be under 15.
All of these must be made by a company within the UK Corporation Tax net, and some programmes are excluded. Readers curious about who actually does the work on such productions may find our guide to who does what in film credits a useful companion.
What are the published rates?
The BFI publishes the rates alongside the equivalent under the previous system, which helps compare old and new:
| Credit | Rate | Previous equivalent |
|---|---|---|
| AVEC: film and high-end television | 34% | 25.5% |
| AVEC: children’s TV, animated TV, animated film | 39% | 29.25% |
| Enhanced AVEC: lower-budget film | 53% | 39.75% |
| Video Games Expenditure Credit | 34% | 25.5% |
The “previous equivalent” column matters because the new credits are set at a higher headline percentage than the old reliefs. The BFI presents the figures side by side so that producers can see how the old and new schemes compare.
How is the amount of a claim worked out?
The BFI states that the credit applies to the lower of two figures: 80% of total core expenditure, or the actual UK core expenditure. It adds that there is no cap on the amount.
“Core expenditure” is the spending on the core production activities, such as pre-production, principal photography, animation shooting, design, production and post-production. The guidance says this counts regardless of the nationality of the people doing the work. What matters is where goods and services are used: they count as UK spend only if they are used or consumed in the UK.
Worked example
The following is illustrative arithmetic, not a real production.
- A film has total core expenditure of £10 million, of which £9 million is spent in the UK.
- 80% of total core expenditure is £8 million.
- The lower of £8 million and £9 million is £8 million.
- At the standard 34% rate, the credit is 34% of £8 million, which is £2.72 million.
If only £6 million had been spent in the UK, the lower figure would be £6 million, and the credit would be 34% of £6 million, which is £2.04 million. The 80% limit is therefore a ceiling, and in the second case it is the UK spend that sets the amount.
What counts as a British film?
For a film, qualifying as British is a condition of the credit. The BFI says a film must pass the cultural test or be an official co-production. The BFI guidance also requires at least 10% of core costs to be UK spend, a threshold that applies across the film, television and games categories.
Passing the cultural test is separate from the financial calculation. A production can spend heavily in the UK and still fail to qualify if it does not meet the cultural criteria. This is one reason the same film can appear to have a “British” identity in the public mind without that being the legal test applied for the credit.
What is Enhanced AVEC for lower-budget films?
Enhanced AVEC, sometimes abbreviated IFTC in the BFI’s guidance, is a separate credit for lower-budget films. According to the BFI:
- the film must have started principal photography on or after 1 April 2024;
- total core expenditure must be up to £23.5 million;
- the enhanced 53% rate applies to the first £15 million;
- the lead director or lead writer must be a British citizen or UK resident, or the film must be an official co-production;
- it became claimable from 1 April 2025.
Projects above £23.5 million can claim only the standard credit. As a worked example, 53% of £15 million is £7.95 million, which is the amount the enhanced rate would apply to at its limit, before any other conditions are considered.
The visual effects credit
The BFI says a VFX credit became available for qualifying expenditure from 1 January 2025. It is available only at the standard 34% AVEC rate for film and high-end television, and not under Enhanced AVEC. The BFI refers queries on the VFX credit to HMRC and mentions a Certification Unit that administers it.
Who does what: the BFI and HMRC
The BFI describes its own role as providing information and guidance, hosting links to calculators and stencils, and listing media lawyers and accountants. Those calculators are guides only and do not guarantee the final calculation.
HMRC administers the claims through Corporation Tax. Its Creative Industry Tax Unit handles eligibility queries, and its guidance covers matters such as withholding tax on payments to non-UK-resident performers. In practice, the BFI explains and signposts, while HMRC decides and pays.
Where the credit sits behind what audiences see
Most viewers never see these rules, yet they shape where productions are made, which in turn shapes crews, studios and local economies. Festivals and awards often highlight British films, as our film festival calendar guide shows, while age labels reach audiences through the system described in our BBFC age ratings explainer. The credit sits upstream of both, in the financing of the work itself.
Reading headlines about production incentives
When a new production announces that it is filming in the UK, the incentive is usually one of several financing sources, and the published rates describe only a percentage of qualifying spend, not the budget or the benefit to any one company. A few habits help when reading such stories:
- check whether a figure refers to total spend, UK spend or the credit itself;
- remember that the 80% limit and the 10% minimum UK spend can change the result;
- note whether a project is film, television, animation or games, since the rates differ;
- treat rates and dates as current only as of the publication date of the guidance.
Official figures are updated from time to time, so anyone planning a claim should consult HMRC’s guidance and a qualified adviser.
Conclusion: a percentage of qualifying spend, with conditions
As of the BFI guidance consulted for this article, the UK’s expenditure credits give film and high-end television productions a 34% rate, children’s and animation productions 39%, and lower-budget films an enhanced 53% on the first £15 million. Each depends on qualifying as British, meeting the minimum UK spend and being made by a company within the Corporation Tax net. The old reliefs end on 1 April 2027.
This article is general information based on published guidance, not legal or tax advice.
Sources: BFI (About UK creative industry expenditure credits); BFI (About UK creative industry tax reliefs)
