Creative industry tax relief covers a group of eight Corporation Tax reliefs that permit eligible companies to increase the amount of expenditure they can claim
Creative Industries
Creative Industry Tax Relief
Creative industry tax relief rewards technical innovation and company growth, maintaining the UK’s position as a leader in the creative industry.
In the Spring Budget 2023, the government announced a reform of the system and introduced Audio-Visual Expenditure Credit (AVEC) and Video Games Expenditure Credit (VGEC).
Additionally, professionals in the theatre, orchestra, museum and gallery markets continue to benefit from temporary relief rates.
Who is eligible for creative industry tax relief?
Companies can claim creative industry expenditure credit or access temporary tax relief rates if they are directly involved in the production and development of:
- Video games
- Theatrical productions
- Orchestral concerts
- Museum or gallery exhibitions
- Film and television
Should companies meet the minimum qualifying expenditure spend within the UK, they can benefit from tax relief.
Changes to creative industry tax relief
Prior to the launch of the expenditure credit scheme, creative professionals had access to eight Corporation Tax reliefs specific to markets within the wider industry. The government has simplified the system, ensuring all companies with creative specialisms can explore the benefits.
AVEC and VGEC demonstrate the government’s commitment to maintaining a modern tax relief system which can maximise the contribution made by the creative industries to the UK economy. Companies can claim via the expenditure credit scheme from January 1 2024.
Expenditure Credits
Audio-Visual Expenditure Credit (AVEC)
AVEC replaces the film, high-end TV, animation and children’s TV tax reliefs. Companies applying for film and high-end TV tax relief are eligible for a credit rate of 34%, while animation and children’s TV productions are eligible for a higher credit rate of 39%.
After considering the standard Corporation Tax rate of 25%, this equates to effective credit rates of 25.5% and 29.25% respectively.
Qualifying expenditure includes pre-production, principal photography, design and post-production. Additionally, films and programmes will be expected to pass a cultural test and be certified as a British production. This process is managed by the British Film Institute (BFI).
Video Games Expenditure Credit (VGEC)
VGEC replaces the Video Games Tax Relief and offers eligible companies a credit rate of 34% of qualifying expenditure. This encompasses expenditure on goods and services that are used or consumed in the UK.
From April 1 2025, all new games must claim the VGEC, while games in development before this date can claim European Economic Area (EEA) expenditure under the existing Video Games Tax Relief scheme until April 1 2027.
Cultural Tax Relief
Museums and Galleries Exhibition Tax Relief (MGETR)
Introduced in 2017, MGETR is a creative industry tax relief which supports cultural institutions and incentivises the creation and hosting of new exhibitions.
As well as temporary or touring exhibitions, it can also be claimed for semi-permanent exhibitions lasting up to five years and enables museums and galleries to experiment more freely with what they offer by way of diversity and innovation.
The rates of relief that can be claimed depend on when the production phase began – pre-October 27 2021, October 27 2021-March 31 2025, or from the latter date onwards – and whether the exhibition is touring or non-touring, the latter 5% lower in each period.
Relief is based upon 80% of qualifying expenditure, which is capped at £500,000 per exhibition.
Orchestra Tax Relief (OTR)
OTR is a creative industries tax relief which offers UK orchestra production companies a tax rebate against expenditure incurred to stage a concert, including travel expenses to and from a location which is not their ‘home’ venue.
While the rate of OTR was increased from 25% to 50% from October 27 2021, it was reduced to 35% with effect from April 1 2025 and will be lowered again back to 25% from April 1 2026.
Orchestra Tax Relief can be claimed on 80% of the total core expenditure.
Theatre Tax Relief (TTR)
Introduced in 2014, TTR is a creative industry tax relief which serves as a tax rebate against money spent on the production of a theatrical piece such as a play, opera, musical, ballet or drama in which live players perform roles.
To be eligible, your company must be responsible for the production and creative and technical decision-making, while the vast majority of performances must be for paying members of the public or for educational purposes.
The rates of relief are aligned with the same criteria as those for MGETR (see above).
What is the minimum spend for creative industry tax relief?
For Audio-Visual Expenditure Credit and Video Games Expenditure Credit, both of these creative industries tax reliefs require a minimum of 10% of the expenditure to be on goods or services used or consumed in the UK.
The minimum spend on a High-End Television production to qualify for AVEC is £1million for a one-hour programme, but the minimum eligible slot length is 20 minutes, applicable on an episode-by-episode basis, which therefore means a budget of £333,333 can also qualify.
State Aid and creative industry tax relief
Creative industry tax reliefs were classed as state aid prior to the Brexit transition in January 2023, when the EU-based system was replaced by the new subsidy control regime.
Subsidies can be given by public authorities to businesses, including those that are eligible for creative industries tax reliefs, to provide a competitive advantage and help drive economic growth.
Expert support claiming creative industry tax relief
If you require any advice regarding your company’s eligibility for creative industry tax relief, randd’s team of experts are available to help.
We have the experience and a proven track record in identifying exactly what qualifies for a creative industries tax credits claim. Call us on 01332 409 711 or email [email protected] to find out more.
