Since the Spring Budget, we’ve been eagerly awaiting the Autumn Statement and further details of the government’s Creative Industry Tax Relief (CITR) reforms and, in particular, the amendments for the new Audio-Visual Expenditure Credit (AVEC) for film and television programmes, and the Video Games Expenditure Credit (VGEC) for video games.

Whilst the mention was fleeting in the Chancellor’s address, following the government’s consultation on reforms to CITR, the final amendments to the draft legislation for the AVEC and VGEC have now been confirmed. There is much detail to be analysed, but it appears that the government has listened to some of the claims of unfairness in the proposals as laid out originally.  Further updates will follow in the coming weeks.

CONNECTED PERSON RULE

It is encouraging to see that some of the areas we’d been seeking clarification on, such as the connected person rule, have been amended in the draft legislation and will apply to the AVEC, VGEC and cultural reliefs.

This is HMRC’s position on the connected person rule which was published as part of the Autumn Statement:

The connected party rule published in the draft legislation on 18 July 2023 now stipulates that the cost of goods or services provided between connected parties must be at an arm’s length price. This will be introduced to the AVEC, VGEC, and the cultural reliefs.

Companies will be required to disclose connected party transactions.

Source: www.gov.uk

We are seeking similar clarification currently on a number of other points.

OTHER KEY DETAILS

The Chancellor announced further tax relief for visual effects (VFX) to help support the UK to become the first-choice destination for VFX production for international film and TV.  This follows a recent consultation which concluded that VFX work has been going to other countries as the UK’s tax system wasn’t as attractive. The government said it would aim to implement the additional tax relief for UK VFX from April 2025 and called for the industry to input on the new measures, which will stimulate future investment.

Unfortunately, the Chancellor didn’t respond to calls for a higher 40% AVEC rate for indie productions. This is something we’d been calling for and lobbying on, along with other industry advisors.

The legislation for AVEC, VGEC and the administrative changes to Theatre Tax Relief, Museums and Galleries Exhibition Tax Reliefs and Orchestra Tax Reliefs will be published as part of the Finance Bill 2023.  As specialists in this area, we are best placed to interpret these reforms to ensure productions both benefit and manage any effects arising from the changes.  Now we have confirmation of the final amendments, we will review everything and provide a fuller update over the coming weeks.

Overall though, it is very encouraging.

 

Read our thoughts on the key announcements for individuals & businesses and the reforms to creative tax relief here: SRLV Autumn Budget Statement 2023