What is the additional VFX expenditure credit?
It is an enhancement within the Audio-Visual Expenditure Credit for qualifying UK visual-effects expenditure on eligible films and high-end television programmes. It increases the headline expenditure-credit treatment for that qualifying VFX expenditure to 39% and removes it from AVEC’s normal 80% restriction. It is not an additional 39% on top of standard AVEC, and the completion-period calculation takes account of the relevant AVEC already claimed. The credit is taxable and passes through the expenditure-credit redemption mechanism, so 39% is a headline rate rather than a guaranteed cash benefit.
Is the 39% VFX rate added to the standard 34% AVEC rate?
No. Standard AVEC has a 34% headline rate for most qualifying film and high-end television expenditure. Qualifying enhanced VFX expenditure receives a total headline treatment of 39%, not 34% plus a further 39%. It is also inaccurate to describe the enhancement simply as a five-percentage-point cash top-up, because exemption from the 80% restriction may change the qualifying base as well as the rate. The final position depends on the calculation for the period and on the redemption steps that follow.
Which productions can claim the enhanced VFX treatment?
The principal target categories are qualifying films and qualifying high-end television programmes. Qualification remains subject to the underlying AVEC conditions, the production-company rules, the separate production trade requirement and the applicable British certification or official co-production requirements. Meeting the visual-effects conditions alone is not enough if the production itself does not qualify for AVEC.
Can an independent film claiming IFTC use the additional VFX credit?
No. A certified independent film claiming the Independent Film Tax Credit cannot also claim the separate additional visual-effects expenditure credit. Where a film has significant potentially qualifying visual-effects expenditure, a comparison between standard AVEC with the VFX enhancement and IFTC may be appropriate, and that comparison should rest on project-specific advice rather than a general rule.
Can animation or children’s television productions qualify?
A production claimed under the animation or children’s television AVEC categories does not simply receive this enhancement automatically. Where a production could potentially fall within more than one regime, the classification and any election consequences must be checked project by project before a position is taken. There is no universal answer for a dual-category production.
What visual-effects work may qualify?
Activities that may qualify include previsualisation used for the VFX process, VFX concept design and storyboarding, CGI characters, environments, objects and shots, compositing, digital matte painting, rotoscoping, tracking and match-moving, lighting and rendering, colour correction and qualifying beauty work, character or creature animation used as VFX, 3D modelling, motion capture, stereo conversion, temporary VFX shots, LIDAR or photogrammetry used to create VFX assets, and images created for virtual sets. Each is subject to its own caveats: the name of a department or an invoice does not determine treatment, and the underlying activity, expenditure and location conditions must all be satisfied.
Does the VFX supplier need to be a UK company?
The statutory test is not simply whether the supplier is British. The expenditure must be relevant global expenditure, UK expenditure, and incurred on relevant VFX work carried out in the UK. The relevant question is generally where the person performing the work is physically based, so a vendor’s registered office or group headquarters does not decide the answer. Work by UK-based artists may potentially qualify even where cloud infrastructure is overseas, and mixed UK and overseas activity requires a just and reasonable apportionment. Supplier invoices alone may not prove the physical work location.
Can software, cloud computing or AI-assisted VFX tools qualify?
Essential short-term software licences and qualifying cloud-computing or storage costs may potentially qualify, while long-term licences and capital items require separate consideration. AI or AI-assisted tools can constitute computer technology, but the underlying activity, expenditure, location and other statutory conditions must still be satisfied, and AI use does not automatically make a cost qualifying. Hardware is generally a capital or excluded boundary and should not be presented as routinely qualifying.
How does the exemption from the 80% restriction work?
Standard AVEC generally uses the lower of UK core expenditure and 80% of total core expenditure. Qualifying relevant UK visual-effects expenditure is removed from that normal 80% restriction, which can increase the qualifying base for the enhanced element. The exemption does not turn overseas VFX expenditure into UK expenditure, and the production still needs evidence identifying the qualifying UK activity behind the figures.
Why is the additional VFX credit generally claimed at completion?
Standard AVEC may have been claimed in periods before completion, whereas the additional VFX calculation is generally undertaken in the completion period or a later period. It can take account of eligible expenditure incurred in relevant earlier periods, and the AVEC previously claimed must be reconciled so the same expenditure is not credited twice. Completion includes completion or abandonment under the applicable rules, and a final BFI certificate is normally required for the completion-period claim.
What records and filing information are required?
A claim is usually supported by production and claimant-company details, accounting periods and the completion date, BFI interim and final certificates, budgets and cost reports, general ledger analysis, vendor contracts, statements of work, invoices and vendor schedules, freelancer and partnership details, personnel roles and duties, physical work-location evidence, time records where relevant, asset or shot-level records, software and cloud-service records, the apportionment methodology, related-party transactions, earlier AVEC computations, the additional information form data and the CT600 and CT600P reconciliation. Returns submitted on or after 6 April 2026 use CT600P under current HMRC guidance, and the general two-year claim window can be affected by long periods of account or amended returns.
