Creative Industries Tax Reliefs: At a glance

What are Creative Industries Tax Reliefs? Which Creative Industries Tax Relief are you eligible for? When should relief be claimed under Audio-Visual Expenditure Credit (AVEC) and Video Games Expenditure Credit (VGEC)? 

This is a freeview 'At a glance' guide for Creative Industries Tax Reliefs. 

Companies engaged in producing films, animation, high-end TV, children's TV, video games, theatre performances, orchestral performances and museum & gallery exhibitions can claim a special Corporation Tax relief in respect of their production costs. 

Summary of the reliefs available: 

Reform to expenditure credits 

• For qualifying expenditure incurred on or after 1 January 2024, companies claiming under FTR, ATR, CTR, HETR, and VGTR can: 
  • Continue to claim FTR, HETV, CTR, ATR or VGTR. 
  • Or opt-in to claim Expenditure Credits(AVEC or VGEC).
• No election for AVEC or VGEC can be made for an accounting period ending before 1 January 2024.
• If a company makes an election for AVEC or VGEC for an accounting period beginning before 1 January 2024: 
  • FTR, HETV, CTR, ATR or VGTR will apply until 1 January 2024, and  
  • AVEC or VGEC will apply to the portion of the accounting period falling after 1 January 2024.
• New productions must claim under AVEC or VGEC from 1 April 2025.
• All productions must claim under AVEC or VGEC from 1 April 2027. 
• FTR, ATR, HETR, CTR and VGTR will cease on 31 March 2027.

FTR, ATR, CTR, HETR, VGTR, TTR, OTR and MGETR

For qualifying expenditure incurred, qualifying companies can:

• Claim an additional tax deduction (an enhancement) of up to 100% of enhanceable expenditure.
• Surrender a loss for a payable tax credit.

*The rates of relief for TTR, OTR and MGETR remain at 50% for touring and all orchestra productions or 45% for non-touring productions until 31 March 2025.

• The surrenderable loss is the lower of:
  • The company's available loss.
  • The available qualifying expenditure (enhanceable expenditure).
• Enhanceable expenditure for FTR, ATR, HETR and CTR is, broadly, the lesser of:
  
  • Core expenditure on goods or services that are used or consumed in the United Kingdom.
  • 80% of total core expenditure. 
• Enhanceable expenditure for VGTR, TTR, OTR and MGETR is broadly, the lesser of:
  • Expenditure on goods or services that are provided from within the United Kingdom or the European Economic Area.
  • 80% of total core expenditure.

Each FTR, ATR, HETR, CTR, VGTR, TTR, OTR and MGETR has its specific conditions. The reliefs are aimed at creative productions based in the UK.

Expenditure Credits 

• The AVEC and VGEC operate in a similar way to the Research & Development Tax Credit (RDEC). 
• Tax relief is received by adding a percentage (34% or 39%) of the qualifying expenditure to taxable profits and then deducting the same amount from the corporation tax liability - see Creative Industries: AVEC worked example.
• Similar to The Original Relief, broadly, the AVEC or VGEC is the lesser of:
  • UK qualifying expenditure. 
  • 80% of total qualifying expenditure. 
• In loss-making periods, some or all of the loss can be surrendered for a payable tax credit. see Creative Industries: AVEC worked example (with losses)

Remaining Creative Industries Tax Reliefs

• TTR, OTR and MGETR are unaffected by the reform to expenditure credits. 
• The rates of relief remain at 50% for touring and all orchestra productions and 45% for non-touring productions until 31 March 2025.

Administrative changes 

• From 1 April 2024, all Creative Industry Tax Relief claims must include an Additional Information Form (AIF).

Useful guides on this topic

Creative Industries: Additional Information Form (AIF)
What are the additional information requirements? When should you complete the Additional Information Form (AIF)? What information is required? 

Creative Industries: Audio-Visual Expenditure Credit (AVEC) & Video Games Expenditure Credit (VGEC)
Audio-Visual Expenditure Credit (AVEC) will replace Film Tax Relief (FTR), High-End TV Tax Relief (HETR), Animation Tax Relief (ATR), and Children’s TV Tax Relief (CTR). Video Games Expenditure Credit (VGEC) will replace Video Games Relief (VGTR).

Creative Industries: AVEC worked example
How to calculate the Audio-Visual Expenditure Credit (AVEC) and Video Games Expenditure Credit (VGEC)? 

Creative Industries: AVEC worked example (with losses)
How to calculate the Audio-Visual Expenditure Credit (AVEC) and Video Games Expenditure Credit (VGEC)?  How to determine the credit repayable to the company if it incurs losses?

Creative Industries: Film Tax Relief and Television Tax Relief
Film Tax Relief (FTR), High-End TV Tax Relief (HETR), Animation Tax Relief (ATR) and, Children’s TV Tax Relief (CTR) are part of the UK's suite of creative industry tax reliefs. 

Creative Industries: Video Games Tax Reliefs (VGTR)
What is Video Games Tax Relief (VGTR)? Who can claim VGTR? When will VGTR cease? 

Creative Industries: Theatre Tax Relief (TTR)
What is Theatre Tax Relief (TTR)? Who can claim it? What are the conditions?

Creative Industries: Orchestra Tax Relief (OTR)
What is Orchestra Tax relief? What are the qualifying conditions? What is the rate of relief?

Creative Industries: Museum & Gallery Exhibitions Tax Relief (MGETR)
What is Museum & Gallery Exhibitions Tax Relief? When does it apply?

R&D Zone
How to calculate RDEC relief with losses and interactions with SME reliefs: worked examples and templates