Additional support for the creative sectors

The measure

The government announced a package of over £1 billion of additional tax reliefs for the UK creative industries together with additional support for the sector, including: 

• a new UK Independent Film Tax Credit (IFTC);
• increasing the generosity of the Audio-Visual Expenditure Credit (AVEC) for visual effects costs;
• permanent extension of higher rates of tax relief for theatres, orchestras, museums and galleries;
• 40% relief from business rates for eligible film studios in England for the next 10 years; and
• £26 million of funding to upgrade the National Theatre’s stages and infrastructure. 

The Government also announced that the Tees Valley Investment Zone will focus on the digital and creative sectors. 

New UK Independent Film Tax Credit 

The new UK IFTC will provide a higher rate of credit of 53% for ‘independent films’ which pass a new test administered by the British Film Institute (BFI). The test is intended to target films that have projected core expenditure of £15 million or less and is expected to require that either key talent on the film, such as the director and writer, must be from the UK, or the film must be an international co-production. 

Films that do not qualify for the 53% rate for independent films can continue to claim AVEC at the basic rate of 34%, or the uplifted rate of 39% for animated films. Companies will not be able to claim both the IFTC and the additional relief for visual effects expenditure in respect of the same film. 

Increased support for the visual effects sector 

Following a call for evidence on the visual effects sector announced at Autumn Statement 2023, the government has announced that it will provide additional tax relief for visual effects costs in films and high-end TV. Under the AVEC, visual effects costs will receive tax credit at a higher rate of 39%, compared to the basic rate of 34%. The 80% cap on qualifying expenditure will also be removed for visual effects costs. 

A consultation will be published shortly on the types of expenditure that will be within scope of the additional tax relief. 

Higher rates of relief for theatres, orchestras, museums and galleries 

The rates of relief for Theatre Tax Relief (TTR), Orchestra Tax Relief (OTR) and Museums and Galleries Exhibition Tax Relief (MGETR) will be permanently set at the higher rates of 40% (for non-touring productions) and 45% (for touring productions and all orchestra productions). The government will also remove the sunset clause for MGETR so that it becomes a permanent tax relief, with no expiry date. 

Who will be affected?

The Independent Film Tax Credit will apply to UK companies incurring production expenditure on lower budget films that incubate UK talent.

The additional support for the visual effects sector will apply to UK companies incurring visual effects expenditure on film and high-end TV productions.

Companies claiming tax relief for theatrical productions, orchestral concerts and museum and gallery exhibitions will benefit from the permanent extension of higher rates for these reliefs.

The business rates relief will apply to eligible film studios in England. 

When will the measure come into effect?

The Independent Film Tax Credit will apply to expenditure incurred from 1 April 2024, for films which commence principal photography on or after 1 April 2024. Claims can be made from 1 April 2025.

The changes for visual effects expenditure will take effect from 1 April 2025.

The extension of higher rates of tax relief for theatres, orchestras, museums and galleries will take effect from 1 April 2025.

The business rates relief will apply from 1 April 2024 for 10 years.