Audio-Visual Expenditure Credits

Audio-Visual Expenditure Credits (AVECs) are a form of Corporation Tax relief for film and TV production companies that replaced the older creative industry relief structure from 1 January 2024. Rather than reducing your taxable profits, AVECs work as a credit that offsets your Corporation Tax bill and can even result in a cash payment if the credit exceeds your tax liability.

What are Audio-Visual Expenditure Credits?

Audio-Visual Expenditure Credits are available for companies producing:

• Films
• High-end TV programmes
• Children's TV programmes
• Animation programmes

These credits are calculated as a percentage of your qualifying production costs. The credit is first taxed at the main Corporation Tax rate, then used to pay off your Corporation Tax liability. Any remaining credit can be used against other tax debts (such as VAT or PAYE), surrendered to group companies, or paid out to you as cash.

Who can claim AVECs?

Your company must be the production company, meaning you're responsible for all stages of production: pre-production, principal photography, post-production, and delivery of the completed film or programme.

You must also be actively engaged in planning and decision-making, and directly negotiate, contract and pay for rights, goods and services related to the production.

British certification requirement

All productions must be certified as British by the British Film Institute. This means your production must either pass a cultural test or qualify through an internationally agreed co-production treaty. The BFI issues interim certificates for work in progress and final certificates once production is complete. You'll need these certificates to make your claim.

Does your production qualify?

Films

Your film qualifies if:

• It's certified as British by the BFI
• It's intended for theatrical release
• At least 10% of the 'core costs' (expenditure on pre-production, principal photography and post-production) relate to UK activities

A film counts as an animation if at least 51% of core costs are spent on animation.

An independent film must begin principal photography on or after 1 April 2024, have a UK writer or director (or be an official co-production), and have core costs below £23.5 million. It must also be certified as a low-budget film by the BFI.

TV programmes

Your TV programme qualifies if:

• It's certified as British by the BFI
• It's intended for broadcast to the general public (including online streaming)
• At least 10% of core costs relate to UK activities
• It's a drama, comedy, documentary, animation or children's programme

A children's programme is one where the primary audience is expected to be under 15 years old. The animation definition is the same as for films (at least 51% of core costs).

For dramas, comedies and documentaries, there are additional requirements:

• Average core costs of at least £1 million for each hour of slot length
• Slot length greater than 20 minutes per episode

Where programmes are commissioned together, they're treated as one programme for these purposes.

How much can you claim?

The expenditure credit is calculated as a percentage of your qualifying costs. Your qualifying costs are the lower of:

• 80% of total core costs, or
• The amount of UK core costs

The expenditure credit rates are:

• 39% for children's TV programmes, animated films and animated TV programmes
• 53% for independent films (from 1 April 2025, applying to costs incurred from 1 April 2024)
• 34% for all other films and TV programmes

Independent films can only claim relief on up to £15 million of core costs.

Visual effects uplift

From 1 April 2025, films and TV programmes claiming the standard 34% rate can claim additional credit for visual effects costs incurred from 1 January 2025. These costs qualify for a 39% rate and are exempt from the 80% cap on total core costs.

How AVECs are redeemed

Once you've calculated your total expenditure credit, it's taxed at the main Corporation Tax rate. The after-tax credit is then applied in the following order:

1. Pay off your Corporation Tax liability for the accounting period

2. Pay off other outstanding Corporation Tax liabilities from other periods

3. Surrender to group companies (if you choose to)

4. Pay off other tax liabilities (such as VAT or PAYE)

5. Any remaining amount becomes a payable credit that HMRC will pay to you

Making a claim

You claim AVECs on your Company Tax Return. If you submit your return on or after 6 April 2026, you must include the CT600P Creative Industries supplementary page.

You'll need to calculate:

• The total expenditure credit due to your company
• The amount used to pay off tax liabilities
• Any amount surrendered to group companies
• The payable credit due to you

Supporting evidence

You must submit an additional information form with your claim, providing for each production:

• A British cultural certificate from the BFI (interim certificates must be followed up with final certificates once production is complete)
• Statements of core costs split between UK and non-UK costs
• A breakdown of costs by category
• Details of connected party transactions

Time limits

You can make, amend or withdraw a claim up to 2 years after the end of the period of account the claim relates to. HMRC may accept late claims in some circumstances.

Sources

• Claiming Audio-Visual Expenditure Credits for Corporation Tax
• Work out how to redeem creative industry expenditure credits
• HMRC email updates, videos and webinars about creative industries reliefs and expenditure credits

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.