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Films, high-end TV, children's TV and animations are eligible for the Audio-Visual Expenditure Credit. Find out the qualifying criteria to get up to 53% back.
The UK film and TV industry is booming, and the Audio-Visual Expenditure Credit (AVEC) is one of the primary supports for the British entertainment industry and is only growing in popularity, according to HMRC’s most recent statistics.
However, companies are frequently unsure if their production meets the criteria, especially in edge cases. Getting your eligibility wrong could risk your entire claim and even result in penalties from HMRC.
Your eligibility depends on the type of production you are producing, its budget, and how it's made. We’ve broken down everything you need to know in this article.
The first thing to know is that AVEC covers four main categories of production:
It’s important to ensure you meet the criteria for the category you’re claiming for, not only to be compliant but also because the latter two on the list have a higher rate of relief.
Each category has its own eligibility rules, but all share a few core requirements.
If you’re looking to claim AVEC, you will have to meet some basic requirements no matter what your production is.
As a company, you must be registered for UK Corporation Tax to claim AVEC (LLPs, partnerships and individuals can’t claim).
Any production can only have one production company claim for it. This will be the company that takes the most active role in development: planning, decision-making, negotiating contracts, and paying for goods and services. Simply commissioning a film while holding the creative copyright isn’t enough.
Regardless of the type of production, you must:
The only exception to these rules is for official co-productions. If your project is being produced under an agreement between the UK government and another government, international authority or organisation, you have a shorter list of requirements. You must be considered an ‘official co-producer’, however you no longer have to be certified as British by BFI, which takes out a big source of admin for a lot of productions.
Yes. For nearly every production, passing the BFI Cultural Test is a non-negotiable step before making an AVEC claim.
Qualifying co-productions are the only exception. They don’t need a BFI certificate but must have an official agreement from the UK government and meet the ‘Modified Creative Connection’ requirement.
The Cultural Test is points-based, covering four sections: Cultural Content (up to 18 points), Creativity, Heritage & Diversity (up to 4 points), Cultural Hubs (up to 5 points), and Cultural Practitioners (up to 8 points). You need at least 18 points out of a possible 35 to pass (or 16 out of 31 for animations).
For more information on the Cultural Test, check out our article: What is the BFI's Cultural Test?
There are very few extra requirements for films, aside from being certified as ‘British’, being shown in theatres and meeting the 10% minimum UK spend requirement.
The definition of “intended for theatrical release” is being shown to a paying audience at a commercial cinema. Your company should expect to earn at least 5% of its income through that theatrical run.
If the film is no longer intended for theatrical release at the end of an accounting period, you unfortunately can’t claim for that period (though any credits already received don’t need to be repaid).
This is another good reason to claim annually for any productions that take more than a single accounting period instead of all at the end, beyond improving your yearly cashflow.
The Independent Film Tax Credit (IFTC) offers lower-budget productions a higher tax credit rate of 53% compared to the 34% you can claim through the usual AVEC route. The IFTC allows qualifying companies to claim up to £6.36 million using this rate (i.e., you can only claim up to £15 million of your core costs).
To qualify, films must have:
Principal photography must have begun on or after 1 April 2024.
TV shows have more hoops to jump through to be eligible for AVEC. For a television programme to be eligible, it must meet the standard requirements for any production plus:
There are individual definitions for dramas, comedies and documentaries. A drama or a comedy depicts events by one or more person, wholly or mostly through playing a role. A documentary is not a drama, but depicts real events and is primarily intended to record or inform.
The slot length threshold can be assessed on a pro-rata basis. Every episode doesn’t need to be an hour; however, a 45-minute programme needs at least £750,000 in core costs.
The threshold is assessed episode by episode. Even if your average across a series is over 20 minutes, a single episode falling below 20 minutes will make the whole programme ineligible. Fortunately, the slot length includes time reserved for advertising. There is unlikely to be any ambiguity on the slot length, as it is usually part of the commissioning agreement.
Several types of TV programme are excluded from AVEC entirely:
Children’s television programmes have a different set of requirements for eligibility. It’s important to follow those requirements to get access to the higher rate of 39% compared to the 34% for usual film and high-end television.
To qualify, it’s expected the primary expected audience must be under 15. The rest of the usual TV requirements for slot length and hourly budget are not necessary.
There is one other useful exception: while quiz and game shows are usually excluded from AVEC, a children’s programme can still qualify even if it has a quiz or game show format, provided the total prizes across the entire series don’t exceed £1,000.
Animated films and TV programmes are also eligible for the higher 39% gross rate.
To qualify as an animation, at least 51% of the core costs (UK and non-UK combined) must be spent on animation, and the finished production must include the animated content.
Animation includes:
For mixed-media productions, you’ll need to make a fair and reasonable apportionment of costs. A single director working across both live-action and animated segments, for example, would have their fee split based on time spent on each.
Each series of the show needs to be assessed on its own, as the core expenditure might change between the series. One of our animation clients recently qualified under the 39% rate by ensuring their series-by-series cost apportionment was watertight.
Animated TV doesn’t need to meet the requirements of high-end television programmes, nor children’s television programmes.
Eligibility can be straightforward for some productions and complex for others, particularly where costs straddle multiple periods, involve co-productions, or mix live action with VFX or animation. Getting it right from the outset means you won’t leave any credit on the table.
If you’d like to discuss whether your production qualifies, or want to make sure your claim is fully compliant, get in touch with the Myriad team.
Films, high-end TV, children's TV and animations are eligible for the Audio-Visual Expenditure Credit. Find out the qualifying criteria to get up to 53% back.
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Please contact us to discuss how working with Myriad can maximise and secure R&D funding opportunities for your business.
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