The UK Screen Alliance has welcomed announcements in today’s Budget that will give a “significant boost” the UK’s Visual Effects industry.

UK Screen Alliance had been lobbying for the vax specific changes that were announced by the Chancellor, Jeremy Hunt, after being strongly hinted at in his Autumn Statement in November.

The government has proposed that for productions spending more than 5% of their budget on VFX in the UK, 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.

The changes announced today, according to UK Screen Alliance estimates, are likely to stimulate an additional £175million 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 on 1st April 2025.

Neil Hatton, CEO of UK Screen Alliance, the trade association representing VFX said,  “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.”

Sir William Sargent, chairman of Oscar nominated Framestore ,for their work on Guardians of the Galaxy 3, said, “The Chancellor’s statement today 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.”

Alex Hope OBE, CEO of beloFX said, “The Chancellor’s announcement is hugely welcome. It will help drive growth in the UK’s VFX industry creating jobs and developing skills and technologies that have applications across the wider screen and hi-tech sectors.”

Tim Caplan, Co-founder & Executive VFX Producer of Union VFX, recent winners of the BAFTA for Special Visual Effects for their work on ‘Poor Things’ said, “This is great news for the UK VFX industry. Much of the VFX work that is currently being taken overseas will now remain in the UK, allowing for sustained growth and ongoing development of the amazing, award winning talent we have here in the UK. The UK can now compete globally on a much more level playing field.”

Rachael Penfold, CEO of One of Us said, “This is such a necessary and welcome boost for our Visual Effects industry. But it also offers a huge benefit to the whole economy – bringing even more exciting, creative work to the UK, and at the same time bolstering our already vibrant and brilliant British film production. This move will reinvigorate the whole industry and the many support jobs it relies on. A wonderful opportunity for job creation nationwide. People should see this is an unambiguously positive step”

Tracy McCreary, MD of Bluebolt said, “This new tax incentives is extremely welcome news and will help position the UK VFX industry as the first choice destination for international film and TV productions.“

Phil Dobree, CEO of Jellyfish Pictures said, “This is big news for our sector and a well-earned endorsement of the VFX sector’s importance to the UK future economy and our position as global leaders in creative tech. It has been the result of consistent hard work from UK Screen Alliance and puts us in a fantastic position to take advantage of the growth we are all anticipating in the coming year.”

Jon Creamer

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