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VFX Tax Credit

A guide to the VFX Uplift the UK’s enhanced 29% tax credit for visual effects.

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UK VFX Tax Uplift: How the AVEC Scheme Supercharges Visual Effects Budgets

Until recently, one of the main obstacles to claiming meaningful tax relief on large VFX budgets was the 80% cap on qualifying UK expenditure. That constraint often forced producers to structure projects around tax rules rather than creative or logistical priorities.

From 1 January 2025, the AVEC system introduces two important changes for VFX-heavy productions:

A higher effective rebate on VFX spend

Qualifying UK VFX costs benefit from an enhanced rate, delivering an effective rebate of 29.25%, based on a gross credit rate of 39%.

The removal of the 80% cap for VFX

Unlike other production costs, 100% of eligible UK VFX expenditure can be claimed, regardless of where the rest of the production takes place or how the overall budget is allocated.

In practical terms, this allows producers to base their most expensive digital work in the UK without having to shift principal photography or restructure the wider production simply to optimise tax relief.

What VFX costs qualify for the uplift?

The uplift applies to costs incurred for the use of computer technology to create or alter images, including:

  • Computer-Generated Imagery (CGI)
  • Compositing, 3D modelling, and animation
  • Visual effects work within virtual production environments
  • Costs associated with Generative AI (GenAI) used within a qualifying VFX pipeline, subject to standard UK expenditure and compliance rules.

As with all claims, costs must be directly attributable to qualifying VFX activity and incurred in the UK.

Essential Requirements for the VFX Uplift

To access this enhanced credit, the project must meet the following criteria:

  1. UK Production Company: The project must be produced by a UK-registered company.
  2. British Certification: The production must pass the cultural test and receive certification from the British Film Institute (BFI)
  3. Work Location: The VFX work must be carried out by staff physically based in the UK.

These requirements are consistent with the UK’s wider screen tax relief framework, while offering substantially improved outcomes for VFX-led projects.

What the VFX uplift does not apply to

The VFX uplift is not available to productions claiming:

  • Enhanced AVEC under the Independent Film Tax Credit
  • Children’s TV Expenditure Credit
  • Animation Expenditure Credit

Productions falling under these regimes should continue to assess eligibility under their respective schemes.

Why this matters for producers

For projects with heavy digital workloads, whether large-scale features, premium episodic drama, or VFX-intensive international co-productions, the UK now offers one of the most competitive environments globally for visual effects spend.

The combination of a deep VFX talent base, established post-production infrastructure, and the removal of the VFX expenditure cap fundamentally changes how and where high-value digital work can be planned.

If you have any questions or need advice on the VFX Uplift please do get in touch

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    David Gibbs | Alliotts

    David
    Gibbs

    Partner

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    David is an International Corporate Tax specialist. He has over 30 years’ experience in providing commercially focused tax advice and support to a wide range of clients, from technology start-ups to large inward investing corporates.

    A qualified Chartered Accountant, David went on to qualify as a Chartered Tax Adviser and prior to joining Alliotts as a partner he held the position of tax partner in Grant Thornton and subsequently in PwC.

    David focuses on providing strategic tax advice to entrepreneurs and privately owned businesses. By investing time in understanding clients and their businesses he is able to provide advice which is practical and appropriate to clients’ circumstances in order to keep taxes to a sensible minimum. He advises on a wide range of taxes including transaction planning, UK outbound and inbound structuring, corporate tax, technology tax reliefs, investor and shareholder planning, capital gains tax and LLPs. David advises both UK and overseas business owners on international tax planning. He also advises on EIS and SEIS, and is on the EMEA Advisory Committee of Alliott Global Alliance (AGA).

    As a leading member of Alliotts Media David specialises in advising individuals and businesses on the following:

     

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    Samuel Ampah | Alliotts

    Samuel
    Ampah

    Senior Manager, Media Team

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    Samuel is a key member of Alliotts Media team, working with production companies and helping produce their accounts. He regularly presents at third party webinars and workshops on a range of areas of interest to media businesses, ranging from tax incentives, accounting and growing a business.

    Samuel is a Trustee of Mama Youth Project and is a member of the Production Guild’s Diversity and Inclusion Group

    As a member of our accounts team Samuel also works with a wide range of UK based and international clients across a variety of sectors. Samuel’s primary role involves delivering accounting, management reporting, VAT and cash flow reporting services to clients. By working closely with Alliotts partners the information Sam provides helps clients ensure that they remain compliant with their filing deadlines and have the financial data they need to make key decisions.

    Testimonials

    “I’ve been lucky enough to have Sam over to the NFTS for 2 years running to speak on a Marketing, Distribution, Sales & Exhibition Masters. He is great at talking through the financing side of things – particularly given the lack of experience that most of our students have in the industry. He is able to break things down and explain them in a much clearer and straightforward manner. He is extremely personable and is always a hit with the students.”

    Poonam Sahota, National film and television school


    “Samuel Ampah and the team at Alliotts could not be more helpful. From the earliest stages of closing, Sam has been readily available to any and all advisors on the show to explain and reassure on the criteria and complexities of the UK film tax credit specific to the needs of the production, going so far as to create his own spreadsheets to verify the producer’s calculations and responding. to every related query by return. As the legislation and HMRC guidelines evolve, it’s reassuring to know Alliotts is in front of developments adding the weight and wisdom of an experienced team of advisors. That Ian Gibbon is a genuine cinephile and Sam enthusiastic about the project’s potential impact only enhances the engagement. Thank you.”

    Mary McGuckian, pembridge pictures.


    “Samuel is a safe pair of hands, with a robust and thorough understanding of all areas of accounting and finance relating to the film sector. He’s also a great speaker, with a knack for putting clients at ease, and explaining (sometimes complex) financial strategies and considerations in a way that is both concise and accessible.”

    Film City Futures