Creative Industries: AVEC worked example

How to calculate the Audio-Visual Expenditure Credit (AVEC) and Video Games Expenditure Credit (VGEC)? 

This is a freeview 'At a glance' guide to calculating the Audio-Visual Expenditure Credit (AVEC) and Video Games Expenditure Credit (VGEC). 

For detailed guidance on the conditions to qualify for AVEC and VGEC, please refer to the subscribers' guide: Creative Industries: Audio-Visual Expenditure Credit (AVEC) & Video Games Expenditure Credit.

For illustrative purposes, the following example provides a calculation of the AVEC. AVEC and VGEC are largely calculated in the same way.

Example

A Ltd is a qualifying company with a qualifying film production, it commenced on 1 April 2024. 

A Ltd opts to claim AVEC for the year-end 31 March 2025. 

During the year-end 31 March 2025, A Ltd incurred £1,000,000 of relevant global expenditure, of which £150,000 was not UK expenditure. 

A Ltd had not incurred any relevant global expenditure before 1 April 2024. 

A Ltd’s tax-adjusted profits for the year ended 31 March 2025 were £1,200,000, before taking into account any claim under AVEC. 

A Ltd is a standalone company and does not have any other outstanding liabilities payable to HMRC.

Calculate A Ltd’s AVEC

Step 1: Ascertain the total of the company's relevant global expenditure 

• Find the amount of Relevant global expenditure incurred on the production up to the end of the accounting period for which the company is making a claim.
• This will include any expenditure incurred on the same production in previous accounting periods. 

Total relevant global expenditure £1,000,000

Step 2: Deduct any expenditure that is not UK expenditure 

UK expenditure is expenditure on goods and services that are used or consumed in the UK. 

Deduct from step 1, any expenditure that is not UK expenditure. £850,000 (£1,000,000 - £150,000). 

Step 3: Calculate the qualifying expenditure to date 

Take the lower of 

• Step 2: £850,000 
• 80% of Step 1: £800,000 (£1,000,000 x 80%). 

Qualifying expenditure to date £800,000

Step 4: Calculate the qualifying expenditure for the period

Deduct from Step 3 the amount (if any) that was the company's qualifying expenditure to date in the prior accounting period for which it claimed an expenditure credit. 

A Ltd's production commenced at the start of the accounting period 1 April 2024. A Ltd had not incurred any relevant global expenditure before this date. No adjustment is required.

A Ltd's qualifying expenditure for the period is £800,000. 

Step 5: Calculate the credit 

Multiply the Step 4 amount by the relevant percentage. The relevant percentage can be found here: Creative Industries Tax Reliefs: At a glance

A Ltd is producing a qualifying Film, the relevant percentage is 34%. 

£272,000 (34% x £800,000) 

The credit will be brought into account as a taxable credit when calculating A Ltd’s taxable profits, and subsequently deducted from A Ltd's tax liability. 

If the company is entitled to make a claim, but is loss making, or the credit exceeds the corporation tax liability for the accounting period an amount may be paid by HMRC to the company. See Creative Industries: AVEC worked example (with losses)

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?

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