Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if her Department will issue guidance on whether film and television productions that use generative artificial intelligence qualify for (a) the Independent Film Tax Credit and (b) rate relief for VFX spend.

From 1 April 2025, films with a UK lead writer or director and budgets of under £15 million will be able to claim an enhanced 53% rate of Audio-Visual Expenditure Credit (AVEC), known as the Independent Film Tax Credit (IFTC). Generative artificial intelligence costs are not excluded from the IFTC. Costs that qualify for the IFTC will be the same costs that currently qualify for the normal rate of AVEC. Guidance can be accessed here: https://www.gov.uk/guidance/claim-audio-visual-expenditure-credits-for-corporation-tax.

From 1 April 2025, film and high-end TV companies may claim an enhanced AVEC rate of 39% on their UK visual effects costs. UK visual effects costs will be exempt from the AVEC’s 80% cap on qualifying expenditure. Generative artificial intelligence costs are not excluded from the additional tax relief for visual effects. Further information on the costs that will qualify for the additional tax relief can be found in the Government’s response to its consultation on the design of the policy, and can be accessed here: https://www.gov.uk/government/consultations/consultation-on-additional-tax-relief-for-visual-effects-costs.

HMRC will publish specific guidance on the additional tax relief for visual effects in due course.