UK Screen Alliance says the changes are likely to stimulate an additional £175m of VFX work to be performed in the UK each year
Today’s budget will give a “significant boost the UK’s visual effects industry,” says UK Screen Alliance.
In a press release, the organisation said improvements to the film and high-end TV incentives specifically for VFX were the result of a proposal presented to HM Treasury by the UK Screen Alliance.
The changes the chancellor of the exchequer, Jeremy Hunt, announced today had been 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.
Furthermore, 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%, says UK Screen Alliance.
For productions shooting in the UK, the removal of the cap means they will be incentivised to stay in UK for their VFX.
UK Screen Alliance says this effectively means an increase of almost 30% in the rate of incentive for VFX.
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.
UK Screen Alliance says this has led to productions claiming the UK’s credit for filming, but completing VFX 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 £175m 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.
The government’s proposals are expected to take effect on 1 April 2025.
Neil Hatton, CEO of UK Screen Alliance, 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 Framestore, 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 and executive VFX producer of Union VFX, 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, founder 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.”
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