Charlotte Anson explains how tax reliefs work in the creative industries.

Despite previous challenges, the UK’s creative industries have seen renewed growth in the past two years. In 2024, the UK/Ireland box office generated £979 million, and Wicked, the biggest film of the year worldwide, was filmed at London’s Elstree studios.

Nearly 10 years ago, Game of Thrones proved just how powerful High-end TV (HETV) production can be for local economies, generating over £50 million for Northern Ireland in 2018 alone. That momentum continues today: HBO’s new prequel, A Knight of Seven Kingdoms, is once again centralising the UK as a major HETV hub, with a local crew of 650 employees.

Screen content isn’t the only factor fuelling growth. The UK’s gaming industry is expanding quickly, adding £12 billion in GVA in 2025, a figure experts believe will increase in 2026 as AI and cloud gaming become more prominent.

The outlook for the UK’s creative industries is clearly promising, and as government incentives continue to adapt and expand, staying informed about the latest creative industry tax reliefs and expenditure credits is more important than ever.

This guide provides an up-to-date overview of the current creative industry tax reliefs, to help businesses in the sector navigate the shifting environment with confidence.

Creative industry tax reliefs (CITRs) are a set of tax incentives in the UK designed to support and encourage investment in the creative industries, such as film, television, animation, video games and theatre. The reliefs help companies offset some of their production costs by providing tax rebates or additional reductions on eligible expenses.

On 1 January 2024, the audio-visual expenditure credit (AVEC) replaced existing film, High-end tv (HETV), animation and children’s TV tax reliefs, and the Video Games Expenditure Credit (VGEC) replaced the Video Games Tax Relief (VGTR).

The up-to-date reliefs list is as follows:

1. Film Expenditure Credit (AVEC)
2. High-end Television Expenditure Credit (HETV AVEC)
3. Animation Expenditure Credit (AVEC)
4. Children’s Television Expenditure Credit (AVEC)
5. Video Games Expenditure Credit (VGEC)
6. Theatre Tax Relief (TTR)
7. Orchestra Tax Relief (OTR)
8. Museum & Galleries Exhibition Tax Relief (MGETR)

 

What AVECs are available?

AVEC and VGEC rates (from 1 January 2024)

• 39% of qualifying expenditure for animated film/TV productions and children’s TV. For a production to qualify for these expenditure credits at least 51% of core costs should be spent on animation.
• 34% of qualifying expenditure for non-animated film/TV productions, non-children’s TV and video games.
• From 1 April 2025, films and TV programmes with a rate of 34% can claim further credit for visual effects costs. This applies to costs incurred from 1 January 2025 and has a rate of 39% of qualifying expenditure.

Key thresholds and rules

• The expenditure threshold for HETV remains at an average of £1m per hour of slot length.
• The relief available for visual effects expenditure has increased from 34% to 39%.
• 80% cap on total core costs for all expenditure credits, except for visual effects, which is exempt.

Who can claim and when?

• The credits became available to claim in respect of qualifying expenditure incurred on or after 1 January 2024.
• The previous tax reliefs (film, television, VGTR, etc.) will remain available until 1 April 2027, allowing productions that began before 1 April 2025 to continue under the previous regime (or elect into the expenditure credit regime), whereas productions commencing on or after 1 April 2025 must claim under AVEC/VGEC.

Independent Film Tax Credit

• Available for films that have core expenditure of less than £23.5m and receive accreditation from the British Film Institute.
• Credit rate is 53% of qualifying expenditure.
• Relief is capped at up to £15m of core costs.
• Qualifying expenditure is capped at 80% of film’s total qualifying expenditure e.g. largest taxable credit a film can claim is £6.36m (£15 million x 80% x 53%).
• Film must have started principal photography on or after 1 April 2024.
• Only expenditure incurred on or after 1 April 2024 can qualify.

Available cultural reliefs

Theatre Tax Relief

• 40% for non‑touring productions
• 45% for touring productions

Orchestra Tax Relief

• 45%

Museum & Galleries Exhibitions Tax Relief

• 40% for non‑touring exhibitions
• 45% for touring exhibitions
  (officially made permanent)

These tax reliefs provide an additional deduction, calculated as the lower of 80% of core expenditure or UK core expenditure. This may be used to offset taxable profits, resulting in potential corporation tax savings at the applicable rate. Alternatively, if a loss is generated, it can be surrendered in exchange for a payable credit at the relevant relief rate.

 

Requirements for creative reliefs

Please note:

Companies claiming any creative reliefs, AVECs or VGECs must complete and submit an ‘additional information form’ online before making the claim on their tax return.

For AVEC (film and other productions), the claiming company must be the qualifying production company. This means the company must:

• be responsible for pre‑production, principal photography, post‑production and delivery of the final work.
• be actively involved in planning and decision making.
• directly negotiate contracts and pay for rights, goods and services.

For all creative industry expenditure credits and tax reliefs there is both an 80% cap and a UK consumption requirement:

For AVEC and VGEC, qualifying expenditure is defined as the lower of 80% of total core expenditure and UK expenditure (goods or services used or consumed in the UK).

For other creative industry tax reliefs (e.g. theatre, orchestra and museums and galleries), relief is calculated by reference to enhanced UK core expenditure, typically subject to an 80% cap. A comprehensive guide to CITR can be found here.

What these rules mean

When it comes to bookkeeping each production, whether a HETV show, video game or exhibition, must be treated as a separate trade for Corporation Tax. Where a company is running several productions simultaneously, each one must be ring-fenced with its own P&L to show how income and expenditure relate to that specific production or project alone.

What records do you need?

Because companies must prove that core expenditure costs are used or consumed in the UK, standard bookkeeping records alone may not be sufficient. For each production, claimants should retain evidence of where work was carried out and where goods or services were used or consumed.

For employee costs:

• Timesheets or schedules tied to the production.
• Contracts and any evidence of the employee’s active role.

For subcontractor costs:

• Written agreements describing the scope of work.
• Invoices referencing the production, plus evidence of where the work was performed.

For consumables and other inputs, what matters is not where items were purchased but whether they were used or consumed in the UK. Goods bought overseas but used in the UK can qualify, but goods used abroad cannot.

Apportionment

Where exact allocation is not possible, HMRC expects a just and reasonable apportionment. Any methodology used should be:

• Documented, with a clear explanation of why it gives a fair result.
• Applied consistently across similar costs.
• More detailed and robust where costs sit close to the 10% UK expenditure threshold.

Where location-based attribution is not practical an allocation key, such as the ratio of UK filming days to total days, may be used, provided the basis is recorded.

Connected party transactions

Payments to related companies, subsidiaries or director-controlled entities must be disclosed in the additional information form.

Failure to disclose or appropriately evidence connected party transactions may result in the relevant expenditure being disallowed or the claim being treated as invalid.

The additional information form and CT600P

All AVEC, VGEC and cultural relief claims require a mandatory additional information form (AIF) submitted via the Government Gateway before or on the date of the tax return. The AIF must include a per-production expenditure breakdown (core vs non-core, UK vs non-UK) and disclose any connected party transactions. A missing or incomplete AIF invalidates the claim.

From 6 April 2026, a new supplementary page called the CT600P must also be included with the Corporation Tax return (CT600). These forms, along with the AIF, are the mechanism through which HMRC receives the information that the records described above are designed to support.

How long to keep records

All production-level records should be kept for at least six years from the end of the relevant accounting period, and longer where enquiries or compliance checks are ongoing, or in cases of deliberate behaviour. With compliance activity in the creative sector on the rise, building good records from the start of production is far easier than reconstructing them later.

How much relief is claimed?

The table below shows the total number and value of claims made for AVEC and VGEC up to and including 11 June 2025, by relief type, covering claims relating to both the 2023-24 and 2024-25 financial years. These figures are not uplifted to reflect claims yet to be received and include only claims paid to date. According to HMRC, future publications are expected to include enough claims across all schemes to present AVEC, VGEC and the tax reliefs separately.

Relief type	Relief	Number of claims	Amount of relief paid (£m)
Film	AVEC	15	11
HETV	AVEC	20	35
Animation	AVEC	5	1
Children’s TV	AVEC	5	1
Video Games	VGEC	15	8

Common misconceptions

Here are some common misconceptions around claiming creative industry tax reliefs.

1. Only large productions are eligible
   
   Many people believe that only large-scale projects or productions are eligible for creative industry tax reliefs. CITR is available to a wide range of creative projects, including small-scale productions, independent films, animation projects, video games, and HETV. It’s not limited to big-budget productions.
   
2. You can claim relief for any creative project

Many assume that any project in the creative industry is eligible for creative industry tax reliefs. Each category (e.g. film, animation, video games, etc.) has specific criteria that need to be met. For instance, organisations must comply with cultural requirements and demonstrate that no less than 10% of core expenditure relates to activities within the UK.

3. You can claim relief for any expenses
   
   Some believe they can claim tax relief on any expense related to the creative project. Only certain costs are eligible for creative industry tax reliefs, such as production costs, salaries, and certain qualifying overheads. Expenses such as marketing, distribution, and financing are not covered. Each tax relief programme has specific rules about what costs are eligible.

Closing thoughts

As the UK’s creative sectors continue to grow, the added support provided by renewed expenditure credits and tax reliefs can make production more accessible and financially viable. The new schemes, like the audio-visual expenditure credits and the enhanced Film Tax Credit, should give companies more opportunities than ever to reduce costs and reinvest in their work.

Staying informed on these updates ensures productions can maximise available support.

• Charlotte Anson is a Tax Director at Price Bailey