Introduction of Audiovisual Tax Reliefs

Campaign
Overview

The Audiovisual Tax Reliefs (now referred to as Audiovisual Expenditure Credits) have played an important role in the UK film and TV production sector by driving economic growth, creating job opportunities and attracting and retaining production activity to the UK. Over two decades (at the time of writing), various reliefs have been introduced and adapted to respond to an evolving market.

In 2004, the Labour Government announced proposals to reform the existing tax relief for film production. The implementation of the new Film Tax Relief had been delayed due to concerns from the sector, including Pact, about the practical operation of the relief, and EU State Aid approval.* The Government consulted on the Film Tax Relief with Pact and others across the sector, and helped pave the way for the High-End Television, Animation and Children’s tax reliefs.

In 2013, then Chancellor George Osbourne announced the introduction of the High-End Television Tax Relief, following campaigning from Pact. At the time, many British-produced programmes were filmed in Europe due to the tax incentives on offer there and the Chancellor wanted to incentivise high-end drama production to move to the UK. Pact CEO, John McVay sat on the Government’s High-End Television Tax Relief working group, which was formed to consider the proposals and design of the tax reliefs in more detail. In the same year, the Government also introduced the Animation Tax Relief.

The following year, Pact launched a campaign to introduce a tax relief for children’s live-action television. As part of this, Pact published a report, Give Kids a Break: The Economic Case For a Children’s TV Tax Credit, which showed that investment in original British children’s TV from the commercial Public Service Broadcasters (PSBs) fell by 97% over the last decade. The report also helped us make the case to Government for the Children’s Tax Relief, which was introduced in 2015.  

Following the closure of the Young Audiences Content Fund in 2022, Pact commissioned research from Oliver and Ohlbaum Associates to examine the current state of the children’s television sector and help make the case for an enhanced children’s and animation tax relief. This report was used to engage with the Secretary of State for Culture, Media and Sport and the Treasury. At the Spring Budget in 2023, the Government announced it would be increasing the level of the children’s and animation tax reliefs to 39%, which amounts to a net value relief of 29.25%.

The Audiovisual Expenditure Credit is effectively a payable cash rebate based on the qualifying expenditure of a production. The credits are calculated directly from qualifying expenditure (rather than being an adjustment to the company’s taxable profit as was the case under the Film, High-End TV, Children’s and Animation Tax Reliefs). More information on the Audiovisual Expenditure Credits can be found on the BFI website.

*The Creative Industries Tax Reliefs: Policy and Development, House of Commons Library, 2024