UK government brings VFX tax relief forward to 1 January

The UK government has brought forward the start date for its increased VFX tax incentives.

Chancellor Rachel Reeves announced in the budget today, 30 October, that VFX spending in the UK will receive a net rebate of 29.25% and will be exempt from the overall 80% cap on spending eligible for film and TV tax relief from 1 January. This brings it forward from the original expectation of 1 April, made by former chancellor Jeremy Hunt earlier this year - who was unable to implement the proposal due to the early election - with the hope that it will avoid production delaying their spend to benefit.

In addition, following a consultation with the industry, a proposed exclusion of costs related to generative AI from the uplift has been dropped.

The UK Screen Alliance, which campaigned for the uplift and bringing its start date forward, estimates that this tax incentive will bring the UK an additional £175million per year of spending on VFX for film and TV, an increase of over 45%, and to create 2,800 new jobs.

Elsewhere in the budget, £25 million will be given to the North East Combined Authority for investment into the Crown Works Studios site in Sunderland. Also previously announced by former chancellor Jeremy Hunt earlier in the year, the money will help realise the development - which hopes to build 20 sound stages for film and HETV as well as create 8,000 jobs for the area.

Screen Alliance CEO Neil Hatton said: “The confirmation in the Budget that the VFX rebate will be available from the New Year is terrific news for the UK’s visual effects companies. We know that productions are making decisions right now on where to place their VFX work for 2025 and beyond. Today’s announcement means that these clients will be incentivised to place many millions of dollars of inward investment work with the UK’s award-winning VFX community, creating considerable value for the UK economy.”

Sir William Sargent, chairman of Framestore Company 3, said: “The UK’s place at the heart of the global visual effects industry has been hard-fought, and these changes represent a significant step forward. This is a highly skilled, highly creative and highly innovative sector with technology at its heart, and the strides we make across film, TV, advertising and immersive experiences have wide-ranging benefits for a wide range of industries. As the impact of emerging technologies continues to grow, it is more vital than ever that we future-proof the UK as a place where the best artists, technologists and creative thinkers can push the boundaries of what is possible - these changes will help them do just that.”

Sue Lyster, executive in charge, Industrial Light and Magic, London said: “We’re incredibly pleased to hear the announcement of improvements to the VFX tax incentive in the Chancellor’s Budget statement. This important step will undoubtedly retain and attract more VFX work to the UK.”

Stefano Salvini, general manager of DNEG London, said: “The Chancellor’s statement is very welcome news for our industry, and recognises its delivery of considerable economic value and strong potential for further growth. This announcement will incentivise productions to place more highly creative VFX work in the UK, driving technological innovation and crucially creating a significant number of new jobs in our industry. We are grateful that the government has also agreed to bring the implementation date forward, allowing these changes to make an immediate and positive impact on the UK’s VFX sector.”

Ben Roberts, BFI chief executive, said: “Today’s Budget announcement introducing additional tax relief for visual effects work in the UK is great news for our industry and wider creative industries within a highly competitive sector internationally.  The UK is proud to be home to some of the world’s most innovative and creative visual effects companies generating jobs in a field that unites creativity and digital innovation. We also welcome the Government’s £3m investment in expanding opportunities for young people to consider a career in the creative industries and the £25m funding that will be supporting the north-east’s Crown Works Studio. Collectively these measures demonstrate confidence in our sector’s capability to grow its contribution to the creative industries and the UK economy.”

Adrian Wootton OBE, chief executive of the British Film Commission, said: “UK film and TV is globally admired, and a key sector driving economic growth. Our VFX sector is one of the jewels in the UK industry’s crown, with a depth of creative and technical expertise. But these are competitive times. Productions are looking globally for the best talent and incentives to guide their investment decisions. Any new measures must address intensifying global competition and help us put our best foot forward. Today’s confirmation of the VFX tax credit increase doubles down on UK strengths and will drive up investment. It is not only welcome, but essential to support our sector and wider UK growth.”

He added on the generative AI inclusion: “We’re delighted that HM Treasury has listened to industry feedback on generative AI, and included these costs in the overall VFX tax credit enhancement. The BFC pressed for this in our consultation response and we believe this will play an important part in keeping our VFX sector future-proofed and globally competitive.”

On the Crown Works Studios investment, North East Mayor Kim McGuinness said: “I’m pleased the Treasury has listened to my calls to save the £25m investment in the Crown Works Studios, so we can unlock 8000 jobs and build a creative powerhouse on the banks of the River Wear. That means jobs for people in a range of industries, from hairdressers, electricians, make up artists, to set designers and script writers.”