What Is the Audio-Visual Expenditure Credit Worth?

The UK has long been considered a powerhouse for film and television production, and the government’s generous tax reliefs play a key role in attracting investment. One of the latest incentives—the Audio-Visual Expenditure Credits, or AVEC—is designed to support UK production companies by offering financial relief on production costs.

AVEC replaces some of the previous creative tax relief schemes for film, TV, animation and children’s TV with a more streamlined claiming process. However, it also comes with a shakeup for how the claim is calculated.

But what exactly are these credits worth, and how can businesses maximise their benefits? 

What is AVEC worth?

Depending on your production, you can claim back different rates on your UK-based core costs as an above-the-line credit:

• For film and television production companies, you can claim the lowest rate of 34% on most eligible costs.
• Children’s TV and animation (TV or film) producers can claim 39% of their eligible expenditure.
• Small-budget film productions can claim the highest rate of 54% on their costs (more on this below).

The amount you can claim is capped at 80% of the total eligible expenditure for AVEC.

Your credit is treated as income and, thus, is taxable at the Corporation Tax rate of 25%. Therefore, the real-world benefit is 25.5% of the qualifying expenditure in the first instance, 29.3% in the second and up to 43.7% in the third.

Visual Effects (VFX)

The good news for film and TV producers is that they can claim a higher rate of 39% on visual effects costs incurred from 1 April 2025. All production companies will benefit from the removal of the 80% cap when it comes to VFX costs.

However, this extra benefit is only available to finished productions (i.e., those with a final BFI certificate or who have abandoned the project). This means claims can only be made for the completion period (or a subsequent period). Since AVEC is a cumulative scheme, the extra costs not claimed while the production is unfinished will still be claimable in the completion period.

Independent Film Tax Credit (IFTC)

Announced in October 2024, the Independent Film Tax Credit, or IFTC, offers an uplift of 53% (compared to the standard rate of 34% for larger film productions). Lower-budget productions are eligible for this higher relief rate, subject to meeting the scheme's requirements.

It works in the same way as the AVEC but with a higher relief rate to support the productions that need it the most. Companies with budgets of up to £23.5 million may claim the IFTC, but with a cap on the total cash credit receivable of £6.36 million.

Claiming AVEC

To claim your entitlement, you’ll need to make your claim through your Corporation Tax Return (CT600). You’ll need some evidence and support to make your AVEC claim.

You can claim the appropriate credit rate on the lower of:

• 80% of total core costs
• the amount of UK core costs

The AVEC is taxed at the main Corporation Tax rate (25%); you will receive the net after-tax benefit.

AVEC is claimed on the cumulative costs of the production, not on the period's costs. For each accounting period you claim for, you should calculate the total costs of the production since the beginning of the project, then subtract the costs already claimed to find the amount you can claim for within that period.

The credit is initially used to pay off your Corporation Tax liability for the current period.

Following this, you’ll need to work out the amount you take onto the next steps. A notional 25% is applied to the original amount of credit for the period and, if this is lower than the amount of credit remaining after paying your CT liability, this is the figure that you take forward.

The leftover credit can then be used to pay off other tax liabilities (from other periods or other liabilities) or surrendered to other group companies. If you still have credit remaining after these steps, you’ll receive a cash credit from HMRC.

Questions? Download our eBook!

We understand that claiming AVEC can be challenging, particularly in this transitional period. That’s why we’ve written up a full deep dive into the rules of making a claim, from eligible productions, preparing for the BFI’s Cultural Test and making your claim.

Download your free copy here.

Still not sure about something? Get in touch with Myriad’s team of experts.