# UK Film Tax Credit: AVEC and the Independent Film Tax Credit

Source: https://storiara.com/incentives/united-kingdom
Last updated: 2026-09-14
Author: Charles Hirschhorn, Storiara

> The UK Audio-Visual Expenditure Credit (AVEC) pays 34% of qualifying core expenditure on films and high-end TV, and 39% for animation and children's TV. Independent films with core costs up to £15 million can claim 53% under the Independent Film Tax Credit. The credit is taxable, qualifying spend is capped at 80% of core costs, and the production needs BFI cultural certification.

The UK has moved its film and high-end TV reliefs onto the Audio-Visual Expenditure Credit. The credit is paid to the production company, which is almost always a single-purpose UK company set up to make the film or series. It shows up in the company's tax return as taxable income, so the headline percentage and the cash you bank are two different numbers.

## Which rate your project gets

| Production type | AVEC rate | Net after 25% Corporation Tax |
|---|---|---|
| Film and high-end TV | 34% | 25.5% |
| Animation (film or TV) and children's TV | 39% | 29.25% |
| Independent film, core costs up to £15m | 53% | 39.75% |
| UK VFX costs (on any qualifying production) | 39% | 29.25% |

The net column assumes the main rate of 25%. VFX costs incurred from 1 January 2025 carry their own 39% rate and are excluded from the 80% cap, which matters a lot on effects-heavy shows where the cap would otherwise bite.

## Working the numbers

Qualifying expenditure is the lower of your UK core costs and 80% of total core costs. Core costs are the pre-production, shoot, and post spend. Development and distribution costs don't count.

Take a £1,000,000 feature with every penny of core cost spent in the UK:

- 80% of total core costs: £1,000,000 x 0.80 = £800,000
- UK core costs: £1,000,000
- Qualifying expenditure is the lower figure, £800,000
- AVEC at 34%: £800,000 x 0.34 = £272,000 gross, or £204,000 after 25% tax
- If the film passes the independent film test, 53%: £800,000 x 0.53 = £424,000 gross, or £318,000 net

Now a £5,000,000 independent feature, again all UK: £5,000,000 x 0.80 = £4,000,000 qualifying, and £4,000,000 x 0.53 = £2,120,000 gross, or £1,590,000 net. The enhanced rate stops at £15 million of core costs, and films with core costs of £23.5 million or more don't qualify for it at all.

For high-end TV, run a second check before you budget the credit in. Average core costs have to reach £1 million per hour of slot length, so a six-episode series with 60-minute slots needs at least £6 million in core costs.

## Getting certified and paid

1. Pass the BFI cultural test or qualify as an official co-production under one of the UK's [co-production treaties](https://storiara.com/glossary/co-production-treaty). The film test has 35 points and you need 18. Up to 18 points come from cultural content, up to 4 from cultural contribution, up to 5 from using UK hubs, and up to 8 from practitioners.
2. Apply to the BFI for interim certification before or during production. That lets you claim while the show is still spending money. Allow 6 to 8 weeks.
3. Claim in the production company's Company Tax Return, with the certificate and a breakdown of costs. Returns filed on or after 6 April 2026 need the CT600P Creative Industries supplementary page.
4. Apply for final certification once the film is finished and ready for audiences, then true up the claim.

If the [cultural test](https://storiara.com/glossary/cultural-test) is new to you, our [guide to qualifying for international incentives](https://storiara.com/blog/the-cultural-test-how-to-qualify-for-international-film-incentives) walks through how producers score points without rewriting the script.

## What catches productions out

The 10% floor sounds easy until a US production shoots almost everything abroad and does a small post job in London. At least 10% of core costs must relate to UK activity, or nothing qualifies.

Non-UK spend still counts toward total core costs, so it drags the 80% cap down. The test is where the activity took place. A US vendor working on a UK stage counts as UK spend, and a UK vendor grading in Paris doesn't.

Because the credit is taxable, a line producer who plugs 34% straight into the finance plan will overstate the cash by about a quarter. Build 25.5% (or 39.75% on an independent film) into the [top sheet](https://storiara.com/glossary/top-sheet) and track UK against non-UK spend in the [cost report](https://storiara.com/glossary/cost-report) from the first week of prep.

## How the UK compares with its neighbors

[Ireland](https://storiara.com/incentives/ireland) pays 32% under Section 481 and 40% for lower-budget features. The Irish credit also has a fixed per-project ceiling tied to €125 million of eligible spend, while AVEC has none. [France](https://storiara.com/incentives/france) offers 30% to international productions through TRIP, rising to 40% with more than €2 million of French VFX, but caps each project at €30 million. For a mid-size independent feature with UK creatives, 39.75% net under the Independent Film Tax Credit is hard to beat in Europe. For wider context on why productions travel, see [tax incentives and global film production](https://storiara.com/blog/tax-incentives-and-global-film-production-why-shoot-overseas), or compare every country on the [incentives hub](https://storiara.com/incentives).

## Frequently asked questions

### Is the UK film tax credit 34% or 25.5%?

Both figures describe the same credit. AVEC is 34% of qualifying expenditure, but the credit is taxed at the main Corporation Tax rate, which is 25%. After that tax, the net benefit is 25.5% of qualifying expenditure.

### Who qualifies for the 53% Independent Film Tax Credit?

Feature films with core expenditure of £15 million or less that pass the BFI's independent film test, which requires UK key talent such as the director and writer or official co-production status. Films with core costs under £23.5 million can still use the enhanced rate on the first £15 million of core costs.

### Do UK visual effects get a higher rate?

Yes. From 1 April 2025, VFX costs incurred on or after 1 January 2025 claim 39% and are left out of the 80% cap on total core costs.

### How long does BFI certification take?

The BFI currently quotes 6 to 8 weeks from receiving an application to issuing a certificate. File the interim application early so the certificate is in hand when you want to make a claim during production.

### Can a US production claim AVEC?

Yes, through a UK production company (usually a single-purpose company set up for the film) that is responsible for the production and pays UK Corporation Tax. The film still has to pass the cultural test or qualify as an official co-production.

## Sources

- [HMRC: Claim Audio-Visual Expenditure Credits for Corporation Tax](https://www.gov.uk/guidance/claim-audio-visual-expenditure-credits-for-corporation-tax)
- [HM Treasury: Additional support for independent film](https://www.gov.uk/government/publications/corporation-tax-tax-relief-for-independent-film-productions/additional-support-for-independent-film)
- [HMRC: Additional tax relief for visual effects (VFX)](https://www.gov.uk/government/publications/corporation-tax-additional-tax-credit-for-visual-effects-vfx-expenditure/additional-tax-relief-for-visual-effects-vfx)
- [BFI: Apply for British certification and tax relief](https://www.bfi.org.uk/apply-british-certification-tax-relief)
- [BFI: Cultural test for film](https://www.bfi.org.uk/apply-british-certification-tax-relief/cultural-test-film)
- [GOV.UK: Corporation Tax rates](https://www.gov.uk/corporation-tax-rates)