UK Animation tax credits are very successful in attracting international work, but we must maintain our global competitiveness.
The Animation tax credit is very successful in attracting productions to the UK, but as other territories also seek a piece of that action, we must ensure that our animation sector remains globally competitive.
The new Audio-Visual Expenditure Credits (AVEC) came into effect on 1st January 2024 and gives a taxable credit rate of 39% for animated films, animated TV programmes and children’s TV programmes, which equates to a refund of up to 29.25% on eligible UK spend. It can be accessed during production or retrospectively, it is available for budgets of any size and for both short and feature animation films and animation TV programmes of any duration.
Films, high-end TV programmes and videogames can claim a taxable credit rate of 34% (effective refund of up to 25.5% of eligible UK spend). An additional uplift to 53% under AVEC (equating to a tax relief of approximately 40%) will be available for films with a max budget of £15 million.
While these announcements are warmly welcomed, Animation UK seeks to enhance our competitive edge through increased tax incentives, and will continue to undertake a review of tax incentives in specific markets, as well as gather information and a read-out from our members on how the sector is shaping up, including loss of business and trends generally.
Commissions are secured on the combination of creative content, skills and talent, but also, critically on value for money and the tax incentives. Other territories increasingly recognise the growth potential held by the animation sector and are providing competitive terms to attract international contracts and secure rights. We welcome the recently announced increase to the independent film tax relief rate and have presented a more detailed proposal presenting an evidenced case for uplifting the animation tax reliefs overall across film and TV, which will boost growth and jobs. Independent evidence detailed in our fuller proposal underscores that this is not a hand-out, nor a cost to Treasury and will support regional growth.
We are currently campaigning for tax relief rates to be increased to 37%, aiming to double TV animation production spend within four years, creating 6,000 jobs and adding £500 million to the GVA. Every £1 investment will generate a return of £4.44.
Animation UK is in ongoing consultations with HMRC, DCMS and the BFI to ensure any recommendations to support inward investment and wider policies can be heard by decision-makers, while reflecting on the impact of recent changes to the status of UK content with regard to international competitors.
