AVEC vs Film & TV Tax Relief: What Changes Before April 2027?

The Audio-Visual Expenditure Credit (AVEC) becomes the only route to relief for film, high-end TV, animation and children's TV productions from 1 April 2027, when Film Tax Relief and the other former reliefs close. If you're still claiming under the old rules, any expenditure you incur from that date can only be relieved under AVEC.

This article explains which productions need to move, how HMRC treats an accounting period that straddles the closure date, and what to check in the months before it arrives.

What happens to the old film and TV tax reliefs in April 2027?

AVEC replaces four reliefs: Film Tax Relief, High-End TV Tax Relief, Animation Tax Relief and Children's TV Tax Relief. It has been phased in, and 1 April 2027 is the final step.

HMRC's Creative Industries Expenditure Credit Manual sets out the end point directly:

“Expenditure incurred from that date can only be relieved under AVEC or VGEC”

This essentially means that the choice you have today, between the old relief and AVEC, disappears for any spend after 31 March 2027. Productions that began before 1 April 2025 have been allowed to continue under the old rules until then, but they can't stay on them any longer.

Video Games Tax Relief closes on the same date, and the equivalent rules for games are covered in our guide to VGEC transition rules. Theatre, orchestra, and museums and galleries reliefs aren't part of this change.

Which scheme offers higher rates, AVEC or legacy tax reliefs?

The Audio-Visual Expenditure Credit offers a higher rate of relief to film and TV productions across the board. The effective rates below are based on the claimable costs. Expenditure credits give you an above-the-line credit which is then taxed. Tax relief works differently; you receive an additional deduction on your taxable income which can then be surrendered for a cash credit, if loss-making.

Taking a UK film production that breaks even (£1M income, £1M expenditure, all in the UK), we can see how AVEC and Film Tax Relief benefit the production differently. In both cases, the production has £800,000 in UK core expenditure (i.e., after development costs and before commercialisation costs), which means it hits the 80% eligibility cap, or £640,000.

Under AVEC, this production receives an expenditure credit of 34%, or £217,600, which is taxed at 25%, giving a benefit of £163,200.

Under Film Tax Relief, the production receives an additional deduction on their eligible expenditure of £640,000. As this production is breakeven, it creates a loss of £640,000, which can be surrendered for a cash benefit at a 25% rate, giving a cash credit of £160,000. If the production were profit-making, it would reduce its taxable profits by that amount.

How does the move work if your accounting period straddles 31 March 2027?

For productions that started principal photography before 1 April 2025, 31 March 2027 is the closure date. Productions starting after this date must claim through AVEC.

When an accounting period runs across the closure date, you have two options: claim AVEC for the whole period, or split the period in two, taking the old relief on expenditure up to 31 March 2027 and AVEC on expenditure after it.

You opt in to AVEC by production, so a company with several productions can keep some on the old relief while moving others across.

If you split the period, expenditure has to be apportioned between the two parts on a fair and reasonable basis. One-off costs go to the part in which they were incurred, and costs that run across the period, such as wages, are usually split by time.

A film production company with a 31 December year end pays a line producer £80,000 for the accounting period 1 January 2027 to 31 December 2027. It splits the period with 3 months falling before the closure date and 9 months after it. £20,000 (£80,000 x 3/12) is treated as expenditure for the old relief, and £60,000 (£80,000 x 9/12) is treated as AVEC expenditure.

It also purchases some set decoration in August 2027. As this date is after the closure date, it must be claimed under AVEC.

On the Additional Information Form (AIF), the production appears twice, once under the old relief and once under AVEC. That means entering details such as the BFI cultural certificate in both sections and attaching two separate relief calculations. You still file a single CT600, because it’s only one accounting period.

What happens if you don't opt in to AVEC?

If you don't opt a production in during the first accounting period that ends after the closure date, HMRC treats the production's separate trade as having ceased on that date. In HMRC's words, “the production is treated as if it has been abandoned”.

No relief (either under the old or new schemes) would be available on any expenditure after 31 March 2027, and you can't opt the production in at a later date. This is the one part of the transition with no way back, so you need to confirm the decision on every production that is still in progress.

Should you move to AVEC before the old reliefs end?

Opting in is open to you now for any accounting period ending on or after 1 January 2024, so moving early is a decision rather than a deadline. There's no universal answer, because it depends on what each production still has left to spend and how it's financed.

However, in most cases, more relief can be gained through AVEC than any legacy relief.

Four points are worth working through:

• The rate. AVEC pays a taxable credit of 34% on most film and high-end TV spend, which works out at 25.5% after corporation tax, compared with 25% under the old reliefs. For animation and children's TV the credit is 39%, or 29.25% net. Our guide to what the AVEC is worth shows how this works through to a claim.
• The independent film rate. Films that began principal photography on or after 1 April 2024 may be able to claim the Independent Film Tax Credit (IFTC), which pays 53% on the first £15m of core expenditure. The film's core expenditure must not exceed £23.5m, and it needs a British lead director or lead writer, or official co-production status. Our comparison of IFTC vs AVEC covers the trade-offs for smaller productions.
• Visual effects. Film and high-end TV productions claiming the standard 34% rate can also claim an additional VFX credit on qualifying UK visual effects spend incurred on or after 1 January 2025.
• Cash flow. AVEC is redeemed in steps, starting with your corporation tax liability for the period, so when the cash arrives depends on your tax position. It's worth checking whether a large claim could bring quarterly instalment payments into play, and some productions structure their claim through a Special Purpose Vehicle (SPV) to change how and when the credit is received.

What should you check before 31 March 2027?

A few checks now will show you where each production stands:

• Which of your productions will still incur expenditure after 31 March 2027, and which relief each one is currently claiming.
• Where your accounting period end dates fall against 31 March 2027, so you know which period straddles it and whether splitting that period is worth doing.
• Whether your BFI Cultural Test certification is up to date (this requirement has not changed).
• Whether your production accounts can separate costs by date, so one-off items and time-based costs can be apportioned without reconstructing them later.

Key takeaways

• Opting in is per production. You can keep some productions on the old relief and move others across, up to the closure date.
• The deadline that matters is your first accounting period ending after 31 March 2027. That is the period in which you need to opt in.
• A split period means two calculations on one return. The production appears twice on the AIF, but you file one CT600.
• There is no second chance. A production that isn't opted in is treated as abandoned, and it can't be opted in later.
• Mapping your accounting periods against 31 March 2027 now removes most of the timing risk.

If you have productions still on the old reliefs and want to work out the best way to move them across, don't leave it to chance. Contact Myriad to discuss your specific situation.