CREC010100 - Overview and definitions: introduction

Finance Act 2024 (FA24) introduced Part 14A to the Corporation Tax Act 2009 (CTA09). Part 14A contains the legislation for two new expenditure credits for the creative industries: 

  • The Audio-Visual Expenditure Credit (AVEC) 

  • The Video Games Expenditure Credit (VGEC) 

After a transition period, AVEC will replace the existing tax reliefs for films and TV programmes in Parts 15 and 15A CTA09: 

  • Film Tax Relief 

  • High-End Television Tax Relief 

  • Animation Tax Relief 

  • Children’s TV Tax Relief 

VGEC will replace the existing Video Games Tax Relief in Part 15B CTA09, again after a transition period. 

For the commencement and transition rules, please see Chapter 9 of this manual. 

For guidance on the earlier tax reliefs, please see the relevant manual: 

Tax treatment 

Like the existing tax reliefs, AVEC and VGEC require production companies to treat the making of each film, TV programme or video game as a separate production trade. There are special rules for calculating the income and expenditure that can be brought into account for the separate trade, which are covered in Chapter 3 of this manual. 

There are also special rules for how losses arising in a separate production trade can be used, which are covered in Chapter 4 of this manual. 

Qualifying criteria 

Only the production company (CREC010200) in relation to a qualifying production is entitled to claim AVEC or VGEC in respect of that production. Note: production companies for video games are also called development companies. References in this manual to production companies include development companies. 

To be a qualifying film, a film: 

  • must be a British film (CREC028000) 

  • must be intended for theatrical release (CREC021000) 

  • must have at least 10% of core expenditure incurred on goods and services used or consumed in the United Kingdom (CREC029000) 

To be a qualifying TV programme, a TV programme: 

  • must be a British programme (CREC028000) 

  • must be intended for broadcast (CREC022000) 

  • must have at least 10% of core expenditure incurred on goods and services used or consumed in the United Kingdom (CREC029000), and 

  • must be a drama, comedy, documentary, animation or children’s programme (CREC022000) 

Dramas, comedies and documentaries must also:  

  • have average core expenditure of at least £1 million per hour of slot length, and 

  • have a slot length in relation to the programme which is greater than 20 minutes per episode. 

See CREC023000. 

To be a qualifying video game, a video game: 

  • must be a British game (CREC028000) 

  • must be intended for supply (CREC027000) 

  • must have at least 10% of core expenditure incurred on goods and services used or consumed in the United Kingdom (CREC029000) 

Expenditure credits 

Production companies that are entitled to AVEC or VGEC can claim an expenditure credit based on a percentage of qualifying expenditure. Chapter 5 of this manual covers expenditure eligible for relief, Chapter 6 explains how to calculate the amount of AVEC or VGEC to which a company is entitled, and Chapter 7 explains how to redeem a company’s expenditure credit(s). 
 

Interpretation of this manual 

In this manual, films, TV programmes and video games are referred to as ‘productions’. 

References within this manual to ‘production companies’ should be taken to include film production companies, TV production companies and video game development companies, unless otherwise specified. 

There are examples throughout this manual to demonstrate how to apply the legislation. An example as it applies to one type of production should be taken to apply to the other types of production in the same way, unless otherwise specified.