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Source: Film and TV Charity

The UK government has launched a “call for evidence” on how to boost the film and high-end TV tax credits, in an effort to retain VFX business in the country.

UK chancellor Jeremy Hunt announced the plans as part of his autumn statement today (November 22), his address to the House of Commons on the state of the economy.

“I know that even more can be invested in visual effects if we increase the generosity of the film and high end TV tax credit, so I’ll today launch a call for evidence for how to make that happen,” said Hunt.

The full statement document, published shortly after his address, said  the call ‘will inform the design of additional tax relief for expenditure on visual effects, which the government intends to deliver through the Audio-Visual Expenditure Credit (AVEC). The government intends to consult on the detailed policy design of further support and intends to implement changes to the expenditure credit from April 2025.’

Its adjustment was one of the themes to emerge from the recommendations submitted to the Culture, Media and Sport (CMS) committee, with the British Film Commission (BFC) concerned the AVEC would be “less generous than the current creative sector tax reliefs” and Screen Scotland calling for a removal of the 80% cap.

BFI funding

The autumn statement has also pledged £2.1m of additional funding for the BFC and BFI Certification Unit – a further point of concern in the recommendations to the committee.

The BFI had flagged to the committee a lack of resources were preventing it from effectively administering the cultural tests for those applying for the tax relief; this extra £2.1m could be put towards such resource issues.

The government also said it will review public investment in research and development spending for the creative industries, to a Spending Review timeframe.

As previously announced, animated film will join animated TV in being eligible for a 5% uplift in tax relief under the AVEC; and the government has amended the definition of a high-end TV documentary with BFI guidance.

Broader measures announced in the statement included a reduction of National Insurance paid by employees from 12% to 10%, taking effect from January 6.

The statement also announced £500m of investment across the next two years in compute power – which powers the development of AI models - “to help make the UK an AI powerhouse.”

UK Screen Alliance, an organisation for UK post-production, VFX, animation and production services businesses, commended the government’s plans, which came a week after a cross-party parliamentary group wrote to the chancellor calling for VFX support.

“Very often clients will say, ‘We love your creativity, your innovation and reliability to deliver. We love your people and we love working in the UK, but your tax incentive doesn’t meet what is available elsewhere in the world.’,” said Neil Hatton, CEO of UK Screen Alliance. ”This consultation and the promise of a more competitive incentive, announced today should aim to position the UK as the first choice destination for VFX production for international film and TV.”  

Caroline Dineage, chair of the CMS committee that has been receiving recommendations, described the VFX plans as “a welcome step” that would provide the sector with “a much-needed competitive edge.”

UK performing arts union Equity responded negatively to the statement. General secretary Paul W Fleming commented, ”The self-employed are being shortchanged by a headline-grabbing tax cut. Our self-employed members want investment to fix the holes in the social security system and public services.

”The government’s continued support for industry through tax reliefs and expenditure credits is welcome. But only as one step in a roadmap towards investing the European average of 0.5% of GDP in the creative industries.”

”In the face of increasing international incentives, the enhanced credits with further funding to support the infrastructure through BFI Certification Unit and BFC, help to lay the foundations for continued growth and jobs,” said Ben Roberts, chief executive at the BFI. ”The consultation on additional tax relief for visual effects expenditure to be delivered through the Audio-Visual Expenditure Credit underlines the increasing importance of digital skills and job opportunities within the workforce.”

“We continue to work on the significant challenges being faced by UK independent film, which is not only a fundamental part of UK screen culture but also essential to the ongoing success of the wider UK industry.”

Adrian Wootton, chief executive of the British Film Commission, described the AVEC call for evidence as “hugely welcome and will further boost our world-leading sector’s offer internationally.

The commitment to a further year’s BFC funding is ”greatly welcomed in the face of intensifying global competition for international productions,” added Wootton.