VFX and post production are allowable costs within the Audio Visual Expenditure Credit (AVEC), providing the qualifying criteria are met. A minimum UK expenditure requirement of 10% of total budget must be exceeded, and the project must qualify as British via the Cultural Test or be an official co-production. Note that there are sufficient points available in the Cultural Test to qualify if only performing VFX or post in the UK.
You do not need to perform all production activity in the UK and it is absolutely possible to claim UK tax relief for post and VFX only, even if no principal photography occurs in the UK.
It is essential to set up a UK based limited production company (FPC or TPC) before shooting begins in order to account for all production costs, even if only the post-production or VFX occurs in the UK.
From January 1st 2025, the tax rebate on VFX expenditure will receive an uplift from 25.5% to 29.25% net after tax, and will be exempt from overall 80% cap on total budget eligible for UK tax relief. This will mean that productions could receive 25.5% relief on filming and other non-VFX costs in the UK (up to 80% of total budget) and still receive a 29.25% rebate on their VFX spend regardless of whether that spend takes their total UK spend above the 80% cap on eligibility for relief. Any VFX activity claimed must occur in the UK and the AVEC qualification criteria must be met.
In 2024, an new tax credit for films with budgets under £23.5 million was introduced; colloquially known as the Indie Film Tax Credit (IFTC), even though it is not restricted to independent films and low budget studio films could also qualify. Relief is tapered if the budget of these films exceeds £15 million and the maximum net rebate that can be claimed is £4.77 million.
The VFX uplift cannot be combined with the IFTC or with the animation tax credit. However any VFX or post production expenditure on films claiming IFTC are eligible costs, and could receive a net rebate of up to 39.75% depending whether the 80% cap on total eligible UK expenditure, or the overall £4.77 million IFTC cap are exceeded. If the budget is betwen £18 million and £23.5 million, it may be worth transfering to the AVEC, if there is significant VFX expenditure, as the uplift can then be claimed on this spend which will be exempt from the 80% cap and therefore the overall UK net rebate may be higher.
