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UK Screen Alliance welcomes the announcements made in 2024 Spring Budget

Apr 26, 2024

The announcements in the Spring Budget (6 March) will give a significant boost to the UK’s Visual Effects (VFX) industry, and are as a result of the proposal submitted to HM Treasury by UK Screen Alliance. The Chancellor of the Exchequer, Jeremy Hunt, announced improvements to the film and high-end TV incentives specifically for VFX, which had been strongly hinted at in his Autumn Statement in November.

The government has proposed that it will lift the 80% cap on total eligible expenditure for the VFX spend only, and that the rate of Audio Visual Expenditure Credit (AVEC) for the VFX spend will be lifted to 39%, which represents a rate of 29.25% after tax, an effective increase of 3.75%. However, for productions shooting in the UK, the removal of the cap means that they will be now also be incentivised to stay in UK for their VFX, effectively a huge increase of almost 30% in the rate of incentive for VFX in this scenario.

Currently, the UK offers an expenditure credit for film and high-end TV production of 25.5% (effective after tax) for eligible UK expenditure. However, once a production has spent 80% of its global budget in the UK, no further incentive is available. This has led to productions claiming the UK’s credit for filming, but as VFX represents the most portable part of the expenditure, very often it will be placed outside the UK so the production can access the tax incentives on the remaining 20% of their budget from another territory.

UK Screen Alliance, in their response to the Treasury’s Call for Evidence, revealed that for films and TV series claiming the UK incentive for filming in the UK, £350 million of VFX on those productions was performed outside the UK each year.

Emma Stone in POOR THINGS. Photo by Atsushi Nishijima. Courtesy of Searchlight Pictures.© 2023 20th Century Studios All Rights Reserved.

The changes announced today, according to UK Screen Alliance estimates, are likely to stimulate an additional £175 million of VFX work to be performed in the UK; a 32% increase on the annual pre-pandemic VFX spend on film and high-end TV. This will generate 2,000 new high-tech and high productivity jobs in VFX and a further 800 indirect jobs. UK Screen Alliance has calculated that the VFX enhancement will be self-funding, as tax receipts from the increased economic activity will cover the cost of the Exchequer providing the incentive.

Stakeholders will now have ten weeks to respond to a consultation on the government’s proposals, which are expected to take effect in April 2025. UK Screen Alliance will be submitting a response to this consultation.

Senior figures in the UK VFX industry warmly welcomed the changes.

“This is a major breakthrough. Before, productions would either film in the UK or do their VFX here, but rarely both, because of the cap on tax relief. That will no longer be the case and the significant growth potential in the UK’s VFX sector will now be unlocked.”

Neil Hatton, CEO of UK Screen Alliance

Sir William Sargent, Chairman of Framestore, Oscar and BAFTA nominated for their work on Guardians of the Galaxy 3, also commented.

“The Chancellor’s statement is an important confirmation of the importance of our sector, not just in film and television, but for the core contribution we make in digital innovations and the skills that now travel across the entire economy. We are grateful for the government’s support.”

Sir William Sargent, Chairman of Framestore

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