UK Screen Alliance Says New Tax Credit Could Create 2,000 VFX Jobs

U.K. vfx and animation studios are celebrating a much needed win this week, after the U.K. Treasury announced its spring budget on Wednesday. The new budget includes increased support for the territory’s film sector by introducing a 53% expenditure credit, equating to tax relief of approximately 40%, for U.K. film productions with a budget up to £15 million ($19.1 million).

According to the UK Screen Alliance, this new system makes the UK’s visual effects industry significantly more competitive. The organization claims it could stimulate as much as £175 million ($223.2 million) for the country’s vfx sector and create up to 2,000 new high-tech and high-productivity jobs in vfx and a further 800 indirect jobs.

The changes have been years in the making, with organizations including the UK Screen Alliance, British Film Institute (BFI), and Animation UK lobbying hard for government intervention to “support this vital, but severely challenged, part of the U.K.’s film industry.”

Changes to the expenditure credit will be available to U.K. films with either a U.K. writer or director or those certified as official U.K. co-productions.

According to Animation UK, the structural change:

[M]arks a transformative moment for the sector, as producers and filmmakers have increasingly struggled to finance films at this level and get them into production in the U.K.

Films meeting the established criteria can claim an increased Audio-Visual Expenditure Credit (AVEC) of 53%, up from 34%, starting April 1, 2024. The AVEC replaces the Film Tax Relief rate, which has provided 25% of qualifying U.K. expenditure on up to 80% of a film’s total production budget. The AVEC at 53% equates to a relief rate of approximately 40% under the Film Tax Relief.

After the spring budget was announced, figures from across the animation and vfx industries expressed their excitement regarding the changes.

Animation UK chair Kate O’Connor said:

Animation UK enthusiastically embraces today’s Budget announcements, particularly the introduction of vfx tax relief and the substantial increase in the tax rate for indie films. With the new rate set at 54%, our sector anticipates a significant impact, propelling animation production in the U.K. even further. Additionally, the VFX proposals will directly benefit our animation studios, enhancing their ability to provide top-tier vfx services. This momentous occasion marks a significant milestone in the evolution of our digital production sector, paving the way for unprecedented growth and innovation.

Framestore CEO Mel Sullivan said in a statement:

While the U.K. vfx industry is recognized around the world for its creativity and innovation, it faces stiff competition from other territories offering generous tax incentives. Today’s statement promises to be a real boost for our industry, and, more widely, a driver for digital skills, jobs and growth across the U.K. We’re grateful to the treasury for recognizing the sector’s importance, and for their commitment to ensuring award-winning companies like ours continue to thrive and succeed.

According to Aardman Animations’ managing director of Sean Clarke:

This is a welcome announcement at a time when it is really challenging to raise finance for independent film production in the U.K. This will be significant in helping Aardman to continue to do what it does best in producing British animated films for a global audience.

BFI chief executive Ben Roberts said:

This is a dramatic moment for U.K. film and the most significant policy intervention since the 1990s. The positive impact will be felt across our industry and through all the new films that audiences will get to enjoy. The films we make are vital to our culture, expression, and creativity—they reflect a diverse and global Britain and build careers.