CREC010100 - Overview and definitions: introduction

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

  • The Audio-Visual Expenditure Credit (AVEC)听

  • The Video Games Expenditure Credit (VGEC)听

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

  • Film Tax Relief听

  • High-End Television Tax Relief听

  • Animation Tax Relief听

  • Children鈥檚 TV Tax Relief听

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

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

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

Tax treatment听

Like the existing tax reliefs, AVEC and VGEC require production companies to treat the making of each film, TV programme听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.听

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.听

Qualifying criteria听

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

To be a qualifying film, a film:听

  • must be a British听film听(CREC028000)听

  • must听be intended for theatrical release听(CREC021000)听

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

To be a qualifying TV programme, a TV programme:听

  • must be a British听programme听(CREC028000)听

  • must be听intended for broadcast听(CREC022000)听

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

  • must be听a drama, comedy, documentary, animation听or children鈥檚 programme听(CREC022000)听

Dramas, comedies听and documentaries must also:听听

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

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

See CREC023000.听

To be a qualifying video game, a video game:听

  • must be a British game听(CREC028000)听

  • must be intended for supply听(CREC027000)听

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

Expenditure credits听

Production companies that are entitled to AVEC or VGEC can claim an expenditure credit based on a percentage of qualifying expenditure.听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鈥檚 expenditure credit(s).听
听

Interpretation of this manual听

In this manual, films, TV programmes and video games are referred to as 鈥�辫谤辞诲耻肠迟颈辞苍蝉鈥�.听

References within this manual to 鈥榩roduction companies鈥� should be taken to include film production companies, TV production companies and video game development companies, unless otherwise specified.听

There are examples throughout this manual to demonstrate听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.听