UK tax reliefs explained: AVEC 34%, animation 39%, independent film 53%

By James Jones, founder of Granary Digital · Updated 5 November 2026

The Audio-Visual Expenditure Credit, or AVEC, is a taxable credit that the UK pays to the company making a certified British film or TV programme, worked out as a percentage of qualifying costs. The rate is 34% for most productions, 39% for animation and children's TV, and 53% for low-budget independent films. This guide explains who qualifies, how the sum works and what a claim involves. It is general information, not tax advice. Production accountants who specialise in screen tax should check your own figures.

The rates

The BFI describes 34% as equivalent to 25.5% under the old system, 39% as 29.25% and 53% as 39.75%. Those are the net figures after corporation tax at 25%.

Where AVEC came from

AVEC replaced the older film, high-end TV, animation and children's TV reliefs. Productions under the old reliefs could claim under AVEC for expenditure incurred from 1 January 2024. New productions have had to claim AVEC since 1 April 2025. The old reliefs cease on 1 April 2027, and from then all productions must claim AVEC. The 53% independent film rate applies to costs incurred from 1 April 2024, and the first claims could be made from 1 April 2025.

Who can claim

The claimant is a company, not an individual, and the company must be inside the UK corporation tax net. It has to be responsible for pre-production, principal photography, post-production and delivery. It must be actively engaged in planning and decision-making, and it must negotiate, contract and pay for rights, goods and services directly. An individual filmmaker needs a company in place to claim.

What qualifies

Films must be certified British by the BFI, either through the cultural test or as an official co-production, and must be intended for theatrical release. At least 10% of core costs must relate to UK activity.

TV must be certified British, intended for broadcast to the general public (streaming counts), at least 10% of core costs on UK activity, and be a drama, comedy, documentary, animation or children's programme. Drama, comedy and documentary also need average core costs of at least £1 million per hour of slot length and a slot of more than 20 minutes per episode.

The cultural test for film is scored out of 35 points across four sections: cultural content up to 18, cultural contribution up to 4, cultural hubs up to 5 and cultural practitioners up to 8. The pass mark is 18.

The independent film rate (IFTC)

The 53% rate is for certified low-budget films. HMRC's manual sets these conditions:

• a BFI low-budget certificate, in addition to the standard film criteria
• total core expenditure of £23.5 million or less
• principal photography starting on or after 1 April 2024
• a UK writer or director, or official co-production status

The 53% applies to a maximum of £15 million of expenditure, which is a separate figure from the £23.5 million budget test. Independent films cannot also claim the visual effects uplift. A film that does not meet the independent conditions can still claim the standard rate, or 39% if it is animated.

How the sum works

Qualifying expenditure is the lower of two figures: 80% of total core costs, or the UK core costs. The credit is that figure multiplied by the rate.

Example 1: a £2 million drama, all costs in the UK, standard rate.

1. 80% of £2,000,000 is £1,600,000, which is less than the UK costs of £2,000,000.
2. £1,600,000 at 34% gives a credit of £544,000 before tax.
3. At the BFI's net equivalent of 25.5% the figure is £408,000.

Example 2: a £1.5 million independent film that holds a low-budget certificate.

1. 80% of £1,500,000 is £1,200,000.
2. £1,200,000 at 53% gives £636,000 before tax.
3. Using the 25% corporation tax rate in the Treasury's own illustration, the cash is about £477,000.

The Treasury's illustration at the budget ceiling. A £15 million budget gives £12 million of qualifying expenditure and a credit of £6.36 million before tax, which the note converts to £4.77 million at 25% corporation tax.

The credit is taxable and is set against the company's other tax liabilities before any cash is paid. These examples are for scale only. Which of your costs count as core expenditure, and which are UK costs, is a matter for your accountant.

How to claim

1. Get BFI certification. The BFI issues an interim certificate for a production in progress and a final one when it is finished. There is no fee, and the BFI quotes a turnaround of 6 to 8 weeks from receiving the application, so apply early. Certificates must be in date at the time of the claim.
2. Claim on the Company Tax Return. A return submitted on or after 6 April 2026 must include the CT600P Creative Industries supplementary page.
3. Send the additional information form as evidence.
4. Mind the time limit. A claim can be made, amended or withdrawn up to two years after the end of the period of account it relates to.

Because the credit comes through the tax return, it arrives after the spend. Build your cash flow so it does not depend on the credit landing during the shoot.

Short films and micro-budgets

The film condition is that the film is certified British and intended for theatrical release. A short that is funded by a grant and screened at festivals may not fit. Ask the BFI certification team before building a budget around the credit. For grant funding aimed at shorts, see our guide to short film funding through BFI NETWORK and the regional film hubs.

Common mistakes

• Starting without a company. The claimant must be the production company in the UK tax net.
• Treating the credit as shoot-day money. It is claimed afterwards.
• Counting the 53% on the whole budget. The 53% rate stops at £15 million of expenditure.
• Forgetting the cap. Only 80% of core costs, or the UK costs if lower, count.
• Leaving certification late. A 6 to 8 week turnaround can sit on your critical path.
• Mixing up the old and new reliefs. The old reliefs cease on 1 April 2027. Ask your accountant which regime applies to your production.

Budgeting for UK spend

A budget should show which costs are UK costs, because they decide how much of the credit you can claim. A UK studio and a UK crew are UK activity. Our short film budget template lays out the lines so you can mark them. If you are weighing rooms and crew, see film and drama studio hire, and film crew hire for the people who already know the building.

What to ask your accountant

• Does my company qualify, and from which date?
• Which of my costs are core and UK expenditure?
• Which certificate do I need, and when should I apply?
• How should I treat the credit in my finance plan?

Sources

• HMRC, Claim audio-visual expenditure credits for corporation tax, read 5 November 2026
• HMRC, Creative Industries Expenditure Credit Manual CREC010200, Overview and definitions: production companies, read 5 November 2026
• HMRC, Creative Industries Expenditure Credit Manual CREC021110, Qualifying productions: independent films: introduction, read 5 November 2026
• HMRC, Creative Industries Expenditure Credit Manual CREC061410, additional credit for visual effects costs, read 5 November 2026
• HM Treasury and HMRC, Policy note: UK independent film tax credit, read 5 November 2026
• HM Treasury and HMRC, Reform of audio-visual creative tax reliefs to expenditure credits, read 5 November 2026
• BFI, About UK creative industry expenditure credits, read 5 November 2026
• BFI, Cultural test for film tax relief qualification, read 5 November 2026
• BFI, British certification and tax relief FAQ, read 5 November 2026
• Filming in England, UK tax reliefs, read 5 November 2026

Related guides

• Short film funding: BFI NETWORK and regional film hubs
• Short film budget template for UK funding applications
• All guides and tools