Audio-Visual Expenditure Credit (AVEC): What You Need To Know

The Audio-Visual Expenditure Credit (AVEC) is one of the most significant reforms to UK creative tax incentives in decades. From 2024, it replaces film and TV tax reliefs with a single, simplified scheme. If you produce qualifying film or TV content, understanding AVEC is the first step to getting a credit of up to 29% of your production costs from HMRC.

Before we continue, are you new to AVEC?

If so, why not watch our AVEC Fundamentals Webinar? It breaks down the essentials like what the credit is, who can claim, and how to calculate your benefit.

What is the Audio-Visual Expenditure Credit?

AVEC was announced in the Spring Budget 2023, coming into effect for expenditure incurred from 1 January 2024. It brings together four separate legacy reliefs into one expenditure credit scheme. The result is a simpler calculation, broader qualification criteria, and more straightforward tax treatment.

It replaces:

• Film Tax Relief
• High-End Television Tax Relief
• Children's Television Tax Relief
• Animation Tax Relief

Other creative sectors still have their own reliefs: Theatre Tax Relief, Museums and Galleries Exhibition Tax Relief, and Orchestra Tax Relief are not affected and continue under their existing schemes.

What are the qualifying criteria for AVEC?

Every film and TV production that you claim AVEC for must meet the following basic criteria:

• It must be produced by a qualifying UK production company
• The production must be certified as British (either by BFI’s Cultural Test or through an official co-production)
• At least 10% of the core costs of production must relate to activities in the UK

The production must also meet the qualifying criteria of either a film, an animation, a high-end TV programme or a children’s TV programme.

Who can claim AVEC?

Only companies registered for UK corporation tax can qualify; unfortunately, LLPs, partnerships and individuals cannot claim AVEC.

Film production companies (FPCs) and television production companies (TPCs) can claim the AVEC, provided they meet the following conditions. They must be responsible for:

• pre-production
• principal photography
• post-production
• delivery of the completed film or programme

You must actively participate in planning and decision-making, and be responsible for contracting and paying for rights, goods, and services.

For official international co-productions, the British partner can claim even if they are not the primary producer, so long as they are an official partner and have made an effective creative, technical or artistic contribution to the production.

It’s important that you only claim AVEC if you are actually responsible for the production. Only one company can claim AVEC; if you’re running a co-production with another UK company and neither of you can meet the above criteria, then there won’t be a claim. Companies that are set up as contractual intermediaries don’t qualify; the production needs to actually be run through the company.

Some companies choose to set up a Special Purpose Vehicle (SPV) to better organise the flow of funds and the production activities, especially if you are running multiple projects. See our guide: What is a Special Purpose Vehicle (SPV) and Why Do Production Companies Need One for Audio-Visual Expenditure Credits (AVEC)?

When can you claim AVEC from?

Companies can claim the AVEC on expenditure incurred from 1 January 2024. You have up to 2 years from the end of the accounting period to submit a claim. Each production is treated as a separate trade, with its own profit and loss calculation. A trade will begin at the earlier of either the pre-production phase or receiving income for the production.

AVEC is a cumulative scheme, which means you can either claim every year for a trade that runs over one accounting period, or you can make a claim for all the costs in one go. The latest you can claim is two years after the end of your production’s final accounting period.

Claiming annually gives you better access to the cash you’re entitled to, critical for supporting cashflow. But those that claim at the end of the production only need to do the work one time and require only one BFI certification.

Example: Company A has an accounting period ending 31 December 2025. It produces a TV show between June 2025 and March 2026, covering two accounting periods. They can choose to claim either annually or all at once.

If annually, Company A would claim for the June to December 2025 activity in their Company Tax return for the period ending 31 December 2025, then the January to March 2026 activity in their Company Tax return for the period ending 31 December 2026.

If they claim all at once, Company A would claim for the entire trade in the Company Tax return for the period ending 31 December 2026.

The transition from the old schemes is now largely complete:

• Productions that began their production phase before 1 April 2025 can continue claiming under the relevant legacy relief until 1 April 2027.
• Productions that began their production phase on or after 1 April 2025 must use AVEC.
• From 1 April 2027, AVEC will be the only scheme available for all productions.

What productions qualify?

Films

A film qualifies for AVEC if it:

• is certified as British by the British Film Institute (BFI)
• is intended for theatrical release (usually defined as at least 5% of expected revenue coming from the paying public in commercial theatres)
• has at least 10% of its core costs related to UK activities

There are no content or minimum budget requirements (beyond the 10% rule).

However, for companies looking to claim the higher rate for the Independent Film Tax Credit, these films must be meet all the above criteria and the requirements for the IFTC:

• Total budget of up to £15 million or core costs of up to £23.5 million
• A “modified creative connection”, which means the film’s director and/or screenwriter is a British citizen or resident, or the film is an official British co-production

Television programmes

A TV programme qualifies if it:

• is certified as British by the BFI
• is intended for broadcast to the general public (including streaming)
• has at least 10% of its core costs relating to UK activities
• is a drama, comedy, documentary, animation, or children's programme

For a programme to qualify as a drama, comedy, or documentary (considered “high-end television”), it must have average core costs of at least £1 million per hour of slot length and a slot length of more than 20 minutes per episode.

Children’s TV does not need to meet the high-end requirements, but does need to have a primary audience expected to be under 15. This is important to be able to access the higher rate of relief for children’s TV.

The following types of programme do not qualify: advertisements, news and current affairs, entertainment formats (quiz shows, game shows, panel shows, variety shows, chat shows, with some exceptions for children’s TV), programmes featuring competitions or announcing results, broadcasts of live events, and training content.

Animations

A production (film or TV) can be treated as an animation if at least 51% of core costs are spent on animation. Animation can include hand-drawn illustrations, 2D or 3D digital rendering or stop motion, or any other type of animation.

Animations qualify for a higher rate of relief, so ensuring these numbers are accurate is critical.

What are the AVEC rates?

The AVEC credit rates are:

• 34% on qualifying films and TV programmes. After corporation tax at 25%, the net benefit is 5%.
• 39% on qualifying children's TV programmes, animated films, and animated TV programmes. After corporation tax at 25%, the net benefit is 25%. This rate also applies to VFX costs.
• 53% of qualifying independent films claiming the Independent Film Tax Credit. After corporation tax at 25%, the net benefit is 75%.

For more details, see our guide: What Is the Audio-Visual Expenditure Credit Worth?

What costs can be claimed?

AVEC is based on your qualifying core costs, which is the lower of:

• 80% of total core costs
• the amount of UK core costs

Core costs cover pre-production, principal photography, and post-production. Development expenditure (the work done before a production is greenlit) does not qualify. Where costs fall partly in the UK and partly overseas, only the UK portion counts towards qualifying expenditure.

For more information on core costs for AVEC, see our guide: Maximising Your AVEC Claim: Understanding Core Costs

What do you need to submit a claim?

For each production, you will need:

• a British cultural certificate from the BFI (interim or final, as appropriate)
• a statement of core costs split between UK and non-UK spend
• a breakdown of costs by category
• details of connected party transactions, where applicable

When you make your claim, all AVEC claims must be accompanied by an Additional Information Form (AIF), submitted before the Corporate Tax Return (CT600). Claims also require the new CT600P supplementary form. Myriad can prepare both on your behalf.

How do productions qualify as British?

The BFI issues a cultural certificate based on its cultural test, which has a pass mark of 18 points out of 35 (16 out of 31 for animations). The test covers cultural content, cultural contribution, cultural hubs, and cultural practitioners.

The BFI issues an interim certificate for productions not yet completed and a final certificate for completed productions. Only the appropriate certificate type will be accepted. Note that the report may incur additional costs to achieve certain points (e.g., an Accountant’s Report).

For more information, see our guide: What is the BFI's Cultural Test?

How is the AVEC credit paid out?

The credit is first applied against the company's corporation tax liability. Any remaining credit can be applied against other tax liabilities or surrendered to other group companies. If a balance remains after these steps, HMRC pays it out as a cash credit.

Because AVEC is an above-the-line credit, it appears as taxable income, which is why the gross rates (39% and 34%) reduce to the net benefit rates (29.25% and 25.5%) after corporation tax at 25%.

Ready to make a claim?

The rules around qualifying expenditure and BFI certification have caught some production companies out. If you're producing a qualifying film or TV programme and haven't yet reviewed how AVEC applies, this is a good moment to do so.

Myriad's advisers work specifically on creative tax relief and support production companies from BFI certification through to HMRC submission. If you have questions about eligibility or want to review your production's tax position, contact us.