Spring Budget 2023: HM Treasury announces reforms to audio-visual tax reliefs

On the 15 March 2023, HM Treasury published the Spring Budget statement, which detailed the reforms to the audio-visual tax reliefs relating to film, high end TV (HETV), animation, children’s programmes and video games.

This announcement follows the HM Treasury consultation published in November. 

In essence, the reforms set out to move all five reliefs to a refundable expenditure credit model, as follows:

• the Audio-Visual Expenditure Credit will cover the film and TV tax relief, and the Video Games Expenditure Credit will cover the current video games tax relief;
• the move from tax credit to refundable expenditure credit model means that (unlike the current tax credit) the refundable expenditure credits will themselves be subject to tax;
• film and HETV will be eligible for a gross credit rate of 34%, netting down to 25.5% after tax;
• video games will also have a gross credit rate of 34%, netting down to 25.5% after tax;
• animation and children’s TV will have a gross credit rate of 39%, netting down to 29.25% after tax which is a significant increase from the current regime;
• the £1 million per hour expenditure credit threshold for high end TV will remain the same;
• the minimum slot length for high end TV will be reduced to 20 minutes, and applied on an episode-by-episode basis;
• a definition of 'a documentary' will be put into legislation, and will be based on guidance currently used by the BFI. The definition will be published as part of draft legislation in Summer 2023 for comment;
• qualifying expenditure for the video games expenditure credit will be limited to expenditure on goods and services used or consumed in the UK.

Please note that the expenditure credits will be available to claim from 1 January 2024. However, a transition period will allow film and TV programmes that have not concluded principle photography, and for video games in development, on 1 April 2025, to continue to claim the existing tax reliefs until 31 March 2027.

Fieldfisher has a wealth of knowledge and experience in the media industry. If you would like to know more about this topic, or for any advice, please contact Tim Johnson (Tim.Johnson@fieldfisher.com), Derek Hill (Derek.hill@fieldfisher.com) or Steve Saltzman (Stephen.Saltzman@Fieldfisher.com) at Fieldfisher.

With thanks to Solicitor Arwa Abdeh, co-author of this article.