UK's Media Industry Picks Up Speed as Governments Offer Extensive Financial Encouragement
UK Announces Enhanced Screen Economy Incentives
The UK government has unveiled a new set of screen economy incentives, aimed at boosting the country's attractiveness for content production and reinforcing its position as a global leader. The changes, effective from April 2025, simplify and increase financial incentives in the face of international competition.
At the heart of the new policy framework is the Audio-Visual Expenditure Credit (AVEC), which offers a net rebate of up to 39.75% for limited-budget films. This replaces the previous system where relief was an adjustment to taxable profits. The AVEC rate for animation and children's TV has been elevated to 39%, now including animated features.
Independent UK films under a £15 million budget can claim a 39.75% tax relief, while projects with heavy VFX can claim up to 53% relief. The Tentpole Production Bonus offers a 2% bonus for projects spending over $200M locally, incentivizing in-market post-production for VFX work.
The policy also strengthens vertical supply-chain integration in the screen economy. From April 2025, the Independent Film Tax Credit (IFTC) for UK-led productions will offer a 53% credit. Eligible film studios across England will receive 40% business rate relief, further supporting production infrastructure, until 2034.
The changes aim to ensure scale-agnostic competitiveness for both tentpole and independent productions. From January 2025, there will be VFX reforms that include a 5% uplift and removal of the 80% cap for domestic VFX spend, totaling a 39% credit.
Over £26M will be invested in cultural institutions like the National Theatre and permanent high-rate reliefs for live performance sectors. The new high-end documentary credit will be introduced from April 1, 2025, to support factual programming.
While these reforms are expected to reinforce the UK's standing as a leading global content production hub, some industry leaders suggest further enhancements are necessary to fully capitalize on these opportunities. Sky’s CEO Dana Strong, for example, argues that even better tax incentives are needed to sustain growth and compete globally.
In summary, the 2025 UK screen economy incentives provide significant financial support through direct expenditure credits and business rate relief, aiming to boost production volume and attract international projects. The impact of these changes is expected to be far-reaching, shaping the UK's screen economy for years to come.
- The UK government's new screen economy incentives also extend to business, as they include measures to strengthen vertical supply-chain integration in the technology sector, such as the proposed 40% business rate relief for eligible film studios.
- The UK's increased financial incentives for the screen economy, effective from April 2025, will not only boost the country's attractiveness for content production but also foster growth in technology-driven areas like VFX, with the introduction of a 5% uplift and removal of the 80% cap for domestic VFX spend.
