UK film
finance.

The UK replaced its legacy creative tax reliefs with a new expenditure credit system in 2024. For feature film and high-end television, that means the Audio-Visual Expenditure Credit (AVEC), with two material uplifts: the Independent Film Tax Credit (IFTC) for lower-budget theatrical features, and the VFX uplift for UK visual effects spend. New productions starting principal photography on or after 1 April 2025 must already claim under AVEC or the IFTC. The old reliefs (Film Tax Relief, HETV, Animation, Children’s TV) close permanently on 1 April 2027.

AVEC and its uplifts are taxable above-the-line credits. The headline rate (for example 34%) is applied to qualifying UK core expenditure, the credit is taxed at the 25% corporation tax main rate, and the net balance is paid to the company as cash. Effective rates are therefore roughly three-quarters of the headline rate.

AVEC runs at a headline 34% on qualifying UK core expenditure for live-action feature film and high-end television. Animation and children’s TV attract 39%. The effective cash rebate on most live-action features is approximately 25.5% of qualifying UK spend.

Qualification requires a UK production company responsible for the production, BFI certification (via the Cultural Test or official co-production status), and a minimum 10% UK core spend. Claims are capped at the lower of 80% of total core expenditure or the actual UK core spend.

The IFTC is an enhanced AVEC rate for qualifying independent theatrical features, introduced under the 2024 Spring Budget and available for productions that began principal photography on or after 1 April 2024. Claims opened on 1 April 2025.

The headline rate is 53%, giving an effective net of approximately 39.75% after corporation tax. The maximum cash credit per film is capped at approximately £4.77m after tax.

Key thresholds and tests:

• Budget cap. Full qualification up to £15m core spend. Films with core budgets up to £23.5m can still claim IFTC, but only on the first £15m.
• Core spend definition. The budget test looks at on-screen core costs. Financing fees, interest, bond fees and legal costs of financing are excluded from the budget figure. This matters for films close to the £15m threshold.
• Creative connection: The film must qualify as British either through the BFI Cultural Test or as an official UK co-production. Cultural-test films additionally need a British or UK-resident lead writer or director. Official co-productions are certified through the treaty and need no separate creative connection condition.
• Theatrical intent: The film must be intended for theatrical release. HMRC requires the intention that a significant proportion of the film’s earnings will come from theatrical exhibition, and accepts 5% of total estimated income as the benchmark for what counts as significant.
• Certification: Cultural-test films require BFI Cultural Test plus Low Budget Film certification. Official co-productions are certified under their treaty and additionally need Low Budget Film certification.

The IFTC cannot be combined with the VFX uplift or the animation uplift. The 53% rate is designed to cover all qualifying expenditure on the film, including VFX.

The VFX uplift is a separate layer on top of standard AVEC, not an alternative regime. It runs at 39% gross on qualifying UK VFX spend, giving approximately 29.25% net. Crucially, the 80% cap does not apply to VFX: 100% of UK VFX spend is claimable.

It is available for film and high-end TV only, not for animation, children’s TV, or IFTC productions. Eligible costs run from 1 January 2025, with claims from 1 April 2025. The enhanced rate is only claimable in the completion period or later, and only after the BFI final certificate has been issued. Interim periods continue at standard 34%.

The VFX definition is broader than it first reads. HMRC’s guidance treats the following as qualifying: CGI, compositing, 3D modelling, digital enhancement, motion capture, colour grading and correction, file conversion and encoding for VFX workflows, and AI or AI-assisted tools used to create or alter images. Outside the scope: physical special effects, principal photography itself, director and DP fees, and shared-purpose tooling that also serves non-VFX functions.

The location test is where the artist sits, not where the pipeline hosts. A UK-based artist using overseas cloud infrastructure still qualifies. A UK company subcontracting VFX to an overseas studio does not.

For any film eligible for both, the two routes cannot be combined, one or the other. On most productions the IFTC is the better route because 39.75% net across all qualifying spend outperforms 25.5% plus a VFX uplift on one portion of the budget. On VFX-heavy productions the calculation can get closer. Worth modelling both if VFX is a significant share of the budget.

Official UK co-production status qualifies a project for AVEC and IFTC without needing to pass the BFI Cultural Test on its own. It is often the most efficient route for European and international producers with UK partners.

The UK holds bilateral co-production treaties with twelve countries: Australia, Brazil, Canada, China, France, India, Israel, Jamaica, Morocco, New Zealand, Palestine, and South Africa. The UK is also a signatory to the European Convention on Cinematographic Co-production, which extends qualifying-partner status to most European states.

Each treaty carries its own rules on minimum contribution, creative and technical balance, and certification.

Beyond tax credits, several public and semi-public funds support UK features.

• BFI Filmmaking Fund. The main UK soft equity route for fiction features. Production funding runs through two strands: Discovery (up to £1m for debut directors on budgets £1m to £3.5m) and Impact (up to £1.25m for more experienced teams). The fund also runs year-round development funding and the Expanded Screen Fund for immersive fiction (up to £150k).
• BFI Doc Society Fund. The principal UK soft money route for feature documentary. Total budget £7.2m across three years, roughly £2.4m per year, delegated to Doc Society. Covers feature development, two production strands (emerging and established), and documentary immersive work.
• BBC Film and Film4. Broadcaster-backed feature financiers. Both develop and co-finance independent features. Usually accessed via agents or existing relationships rather than open submission.
• BFI UK Global Screen Fund. The BFI’s international fund, significantly expanded for 2026 to 2029 from £7m per year to over £18m. Five pillars covering International Distribution, International Co-production, International Business Development, Development and Promoting UK Screen. Several new strands introduced in 2026, including a Slate Fund for 3 to 5 projects at advanced development, a Majority Co-production strand for animation and documentary, a Film Sales Minimum Guarantee strand supporting UK sales agents, and a Challenger award of £50k for earlier-stage companies.
• Nations and regions. Screen Scotland, Ffilm Cymru Wales, Northern Ireland Screen, Screen Ireland (for RoI), plus regional bodies including North East Screen, Screen Yorkshire, Film London and Liverpool Film Office. Development and production funds plus regional spend incentives. Stacks with AVEC/IFTC and BFI.
• Creative Europe MEDIA. The UK left Creative Europe in 2020 as a consequence of Brexit, and rejoined in January 2024 as part of the broader Horizon Europe association agreement. UK membership runs to the end of the current programme period in 2027, with continued access after that subject to negotiation. UK producers can now access MEDIA funding for development, co-development, slate funding, distribution, and Film Festivals.