Your trusted adviser for R&D Tax Credits, Creative Tax Relief, and R&D Grants
Your trusted adviser for R&D Tax Credits, Creative Tax Relief, and R&D Grants
Are you in the film or TV industry? Let us help you understand how the Audio-Visual Expenditure Credit (AVEC) can benefit your business. From eligibility criteria to claiming the credit, we cover the essentials of claiming AVEC below.
The Audio-Visual Expenditure Credit (AVEC), introduced in the Spring Budget 2023, replaces Film Tax Relief, High-End Television Tax Relief, Children’s Television Tax Relief, and Animation Tax Relief with a streamlined scheme featuring simplified calculations and broader qualification criteria.
Designed to make tax relief more accessible to producers in film and television, AVEC offers straightforward tax treatment for easier compliance.
Theatre Tax Relief, Museums and Galleries Exhibition Tax Relief, and Orchestra Tax Relief remain unchanged under their current frameworks.
The Audio-Visual Expenditure Credit provides generous tax relief for creative productions, offering 39% of qualifying expenditure for children’s TV, animations and visual effects costs, with a net benefit of 29.25% after corporation tax, and 34% for other films and TV programs, with a net benefit of 25.5%.
The Independent Film Tax Credit (IFTC) offers small producers an even higher rate of 53%, with a net benefit of 39.75%.
As an above-the-line credit, AVEC is taxable income, but it provides significant real-world benefits to creative businesses.
Production companies can claim AVEC on a portion of their core costs, which include pre-production, principal photography, and post-production. These activities don’t have to be completed directly by the production company; subcontractors can handle some tasks.
This means productions with 100% of costs in the UK can claim up to 80%, while productions with costs outside the UK can only claim the UK portion, provided it’s less than 80% of total costs.
There are four phases of development, according to the legislation:
The last three phases can be claimed as "core costs".
The key to when pre-production begins is knowing when the project was “green-lit”. Development activity is usually undertaken to determine whether the production is commercially feasible. Any expenditure in this stage is speculative in nature, even if it is eventually used in the production.
Production companies can claim AVEC if they meet specific criteria. Film production companies (FPCs) or television production companies (TPCs) can claim the AVEC on their productions, so long as they are responsible for:
The FPC or TPC must also actively participate in planning and decision-making and be responsible for contracting and paying for rights, goods, and services.
The AVEC must be used to pay off a company’s Corporation Tax liability first. If there is a remainder, it can be used to pay off other tax liabilities or it can be surrendered to other group companies.
If there is still a remainder after these steps, companies will receive a cash credit for the leftover. This needs to be worked out by the claimant before submission, as a self-assessed tax credit.
To qualify for Audio-Visual Expenditure Credit, films must:
If 51% of the core costs go to animation, the film qualifies as an animation (which comes with a higher rate of relief!).
The IFTC offers enhanced AVEC rates for films with core budgets under £23.5 million, starting production on or after 1 April 2024. To qualify, productions must meet standard requirements and have a British director or scriptwriter, or be an official British co-production.
Eligible TV programmes must:
A children’s programme targets viewers under 15 years old. To qualify as an animation, 51% of core costs must go to animation. Children's and animated TV has a higher rate of relief.
Drama, comedy, or documentary programmes must:
Excluded content includes ads, news, entertainment shows, live broadcasts, and training material.
To claim AVEC, production companies must treat each film or TV programme as a separate production trade. The following documents and information are required:
The claim itself is submitted as part of the Corporate Tax Return (CT600).
In our AVEC eBook, we explain how you can make the most of this valuable government programme.
✅ Eligibility Made Clear: Understand the requirements to qualify for the Audio-Visual Expenditure Credit, including certification as a "British" production.
✅Claiming AVEC Simplified: Learn the step-by-step process of preparing an AVEC claim.
✅Breakdown of Qualifying Costs: Discover which phases of production—pre-production, principal photography, and post-production—are covered and how costs are apportioned.
Myriad is your go-to partner for a successful Audio-Visual Expenditure Credit claim.
Our experienced team of application specialists, cost accountants, corporate tax experts, and AVEC consultants have a reputation for helping UK film and TV production companies unlock maximum value from government funding programs.
Let us help you claim AVEC for your project today!
If you want to claim Video Games Tax Relief, your video game must be certified as British. You must pass the British Film Institute (BFI) cultural test to receive this certification.
To pass the BFI cultural test, complete an online application form for each video game for which you want to claim VGTR. The BFI will assess your application and award points based on the cultural content of the game, its cultural contribution, its cultural hubs, and its cultural practitioners. Each video game must score at least 16 out of 31 points to pass the test.
Myriad employs BFI application specialists who can help you pass this test. Contact us for advice.
BFI is currently reporting 18-20 weeks to process submitted applications.
Delays may occur if application forms are not correctly completed or need further information. If you need the certificate by a specific date, make sure you apply in good time and specify your deadline date on the application.
A Letter of Comfort: If you’re not yet ready to complete a cultural test application, you can submit a draft application and receive a Letter of Comfort from the BFI. This letter will state that the video game(s) should pass the cultural test. A Letter of Comfort can’t be used to submit a VGEC claim to HMRC, but it is reassuring to have and can help you secure financing.
An Interim Certificate: You can apply for an Interim Certificate if your video game is still in production. An Interim Certificate will be issued once the BFI and the Department of Culture, Media and Sport (DCMS) are satisfied that your video game will pass the cultural test based on the proposals set out in your application.
A Final Certificate: A final certificate proving your game is British will only be issued after your video game is finished and ready for release. Therefore, applications for a final certificate should not be submitted before the video game has been completed.
The Accountant's Report is required when an application claims points in Section C and/or Section D.
The Accountant's report aims to verify the total and UK expenditure of the work in Section C and the nationality or residence of all persons in Section D.
The Accountant's Report must be prepared by a person eligible for appointment as a company auditor under section 1212 of the Companies Act 2006.
A report can cost between £500 and £2,000 per application, depending on the video game costs and the number of applications you submit.
The BFI cultural test regulations require you to make a statutory declaration which states that the information you’ve given in your application is accurate.
A statutory declaration is required for both the Interim and Final certifications.
The statutory declaration must be made before a practising solicitor, general notary, Justice of the Peace or an officer authorised by law to administer a statutory declaration under the Statutory Declaration Act 1835.
Some production companies may be carrying out research and development alongside their film or television production.
A company can claim AVEC and R&D tax relief; however, the two schemes cannot be claimed on the same expenditure. Where AVEC is claimed on a specific cost, the production company can’t claim for any other reliefs (including R&D tax relief) for that cost. This means that if a production company chooses to claim AVEC, any research and development within the AVEC project wouldn’t qualify.
If a company can separate the R&D work from the film or TV production into separate projects with distinct expenditures, the two reliefs can be claimed within the same accounting period.
For example, developing a new type of pyrotechnic for a specific shot may be claimed under R&D tax relief, whilst the larger production would be claimed under AVEC. This would be true even if the pyrotechnic were used in the production, so long as no costs were claimed twice.
Your accounting period will determine the R&D tax relief scheme you can claim through.
The key to when core costs can be claimed is knowing when the project was “green-lit”. Development activity is usually undertaken to determine whether the production is commercially feasible. Any expenditure in this stage is speculative in nature.
Expenditure can be claimed once it is clear that the production will go ahead. Some production companies may have done very little conceptual development before production, and some may have spent more time assessing its commercial viability.
AVEC can no longer be claimed once the production is in a state where it can be broadcast. Commercialisation activities are no longer eligible, even though they may be crucial to a production's success; they are activities following when a production could be released to the public.
Core expenditure must be apportioned on a “fair and reasonable basis". There are multiple ways you can define this, depending on the cost. You may wish to explain your methodology to HMRC to ensure you meet this criterion.
As with core and non-core expenditure, you will need to apportion UK and non-UK expenditure. Workers based in a UK office or working remotely in the UK can be included, but workers physically outside of the UK are ineligible. This applies regardless of where the company is based, the worker’s nationality or whether the company is in a group with the claimant.
For some costs that are partly based in the UK, you can choose how to apportion the cost. A staff member that works partly in the UK will only be eligible for the number of days they are working in the UK.
Some non-UK services are indirectly used in video games, such as services supplied by script/dialogue writers, concept artists, composers, and researchers. These are used by the developers and appear in the game having been transformed. HMRC will allow these costs to be included, although they will need to be apportioned based on where they are transformed. For example, suppose a German company provides concept art that is later used by a team of developers. In that case, it must be apportioned according to how many developers are in the UK.
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Is your business registered for Corporation Tax in the UK or are you a partnership with corporate owners?
Have you developed new or improved existing products, processes or services in the last 2 accounting periods?
Does your business have fewer than 500 staff, and either: A turnover of no more than €100 million; or Gross assets of no more than €86 million?
Sorry, you must be a UK limited company or be a Partnership with corporate owners to be eligible for R&D tax credits.
In order to qualify for R&D tax credits you must be seeking to advance science or technology within your industry. As you’ve not developed any new or improved any existing innovative tools, products or services, and not re-developed any existing products, processes or services in the last 2 years. It is unlikely you have any qualifying activity. If you’re unsure, email or call us and we’ll help clarify.
In order to claim R&D tax credits, you need to either employ staff or spend money on contractors, consumable items and other items. If you’re unsure, email or call us and we’ll help clarify.
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Congrats!! Based on your previous answers, you will qualify for the SME scheme. If you’d like some help maximising and securing your claim, please email or call us.
Congrats!! Based on your previous answers, you will qualify for the RDEC scheme. If you’d like some help maximising and securing your claim, please email or call us.
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