The Chancellor of the Exchequer in his Budget speech today (15th March 2023) has made some important announcements regarding the screen sector tax credits.
These announcements bring some clarity to the proposed transition from the current reliefs to the new expenditure credits that were proposed in his Autumn Statement of last November.
The rates announced today for the Audio Visual Expenditure Credit would be as follows:
- Film and High-End TV – 34%
- Animation and Children’s TV – 39%
It is important to realise that expenditure credits will be taxable; a significant change from the current way of delivering the incentives. So 34% will give a net rate of just above 25% once corporation tax at 25% is payable. Therefore, there is only a marginal increase for film and HETV, although the headline rates appear eye-catching.
Claims can be made from 1st Jan 2024. Film and TV programmes that have not concluded principle photography on 1 April 2025 may continue to claim the existing tax reliefs until April 2027, at which point the existing reliefs will sunset.
The Animation credit at 39% represents a real increase, with the net value around 29% after tax. Although this is less than the rate of relief we have been campaigning for, nonetheless it is welcome and it will provide a boost.
The Government has agreed to keep the High-End TV minimum spend threshold unchanged at £1 million, and the minimum slot length for HETV programmes will be reduced to 20 minutes.
The Government has decided to keep the 80% qualifying expenditure cap in place, but has acknowledged that it has a negative effect on VFX. UK Screen Alliance made strong representations to the consultation, and the Government have said today that they will consider the case for targeted support for VFX later this year.
Overall, today’s announcements are good for our industry. They provide clarity and nothing has got worse. There’s a boost for animation and a promise of targeted support for VFX to come.
Today’s announcements about the Audio Visual Expenditure Credit will ensure that the UK remains a great place to make TV and film. I welcome the real increase in the incentive for Animation and Children’s programmes, which will encourage much needed investment in these genres. The Government has also recognised the unintended negative effect the 80% cap on qualifying expenditure has on Visual Effects (VFX) and although the cap will remain in place, I am particularly pleased to see that the Government will consider our case for further targeted support for VFX later in the year. We look forward to working with the Government to shape this initiative.
Neil Hatton, CEO of UK Screen Alliance
