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If you worked in UK production finance before 2024, you probably knew Film Tax Relief, High-End TV Tax Relief, Animation Tax Relief and Children's TV Tax Relief reasonably well. They had been around for years, the mechanics were familiar, and most production accountants could run the numbers in their sleep.
Then the Audio-Visual Expenditure Credit, or AVEC, arrived and replaced all four. If your job involves coding costs, preparing claims, or simply making sure a production's numbers stand up to scrutiny, this is not a change you can quietly ignore. The way expenditure needs to be categorised, tracked and evidenced has genuinely moved, and getting it wrong does not just mean a delayed claim, it can mean a smaller one.
This is a practical explainer, not tax advice. Rates, thresholds and qualifying conditions in this space have moved more than once since 2024 and are likely to move again, so treat the figures below as context rather than the final word, and confirm current thresholds with a production tax specialist before you rely on them for a claim.
AVEC took effect for expenditure incurred from 1 January 2024, bringing film, high-end television, animation and children's television under one expenditure credit scheme rather than four separate reliefs, each with its own rules (BFI). The legacy reliefs did not disappear overnight. Productions had a transitional window to claim under the old rules or move across, with all productions required to claim under the expenditure credit system from April 2027 (BFI).
The mechanics changed too. Where the old reliefs reduced taxable profit, AVEC is an above the line credit, meaning it is treated as taxable income and then taxed at the main rate of Corporation Tax rather than sitting below the line (UK Screen Alliance). That single structural change affects how the benefit flows through a production's accounts, and it is one of the first things a finance system needs to model correctly rather than bolt on afterwards.
Alongside AVEC, the government introduced the Independent Film Tax Credit, an enhanced rate aimed at lower budget UK films that meet a separate BFI test, with claims open from April 2025 for eligible productions (British Film Commission). Independent films receive a materially higher rate than the standard AVEC rate (gov.uk), which makes correctly identifying and certifying a production as independent from the outset genuinely valuable, not a box to tick retrospectively.
This is where the change stops being a policy footnote and starts being a day to day finance job.
UK versus non-UK spend. AVEC is only available on UK core expenditure, and qualifying expenditure is calculated as the lower of 80% of total core expenditure or the actual UK core expenditure incurred, alongside a minimum requirement that at least 10% of core expenditure is UK spend (BFI). In practice, that means every cost needs a clean UK or non-UK tag from the point it is committed, not reconstructed at claim time from invoices and best guesses. A production shooting partly overseas, using an overseas facility, or paying non-UK crew cannot simply total up spend and hope the split falls out neatly later.
VFX cost treatment. This is the newest and arguably trickiest area. From January 2025, qualifying UK visual effects costs benefit from an enhanced rate and, critically, are excluded from the 80% cap that applies to other core expenditure (British Film Commission). To claim it, the VFX work has to be carried out by UK based staff, and HMRC has said it will verify that visual effects costs are genuine and UK incurred, which means claimants need to be ready to provide evidence of the costs and details of the company that carried out the work (Wiggin). That means VFX spend cannot simply sit inside a general post production cost code. It needs its own coding structure from the outset, separate enough to be pulled out, evidenced, and reconciled against a specific vendor and location without a manual rebuild.
Get either of these wrong, and you are not just risking a delay. You are risking under-claiming a credit that, for VFX heavy productions especially, can be worth a meaningful amount of money.
None of this works on trust. HMRC's approach to AVEC leans heavily on evidence, and that shows up in a few consistent expectations.
First, BFI certification. Whether a production is claiming as a British qualifying film or TV programme, or under the Independent Film Tax Credit, certification from the BFI sits at the centre of the claim and needs to be secured through the correct route before HMRC will process it (BFI).
Second, a clear split between UK and non-UK spend that can be traced back to source, not summarised after the fact. Third, for VFX claims specifically, documented evidence of which company carried out the work and confirmation that the costs were genuinely incurred in the UK, ready to hand over if HMRC asks (Wiggin). Fourth, a record of committed costs alongside actual spend, since AVEC is a cumulative scheme and claims can be made annually across a production's life rather than only at completion, which means the underlying cost data needs to be accurate and defensible at multiple points, not just once at the end.
Put together, this is an audit trail that has to exist while the production is happening, not one that gets built retrospectively from a folder of invoices once someone asks for it.
This is exactly the kind of tracking problem Just-TV, built on Microsoft Dynamics 365 Business Central, is designed around. Rather than treating AVEC coding as a separate exercise layered on top of general cost tracking, Just-TV lets UK and non-UK spend be tagged as costs are committed, so the split needed for the 80% cap and the 10% minimum UK spend threshold is available from the live data rather than reconstructed at claim time.
Because VFX now needs its own audit trail, cost codes can isolate UK visual effects spend from the rest of post production from the moment a commitment is raised, keeping it traceable back to the vendor and ready to evidence if HMRC queries it. Since budget, commitments, actuals and cash flow all sit on one unified dataset rather than scattered spreadsheets, a production accountant preparing an AVEC claim, whether interim or at completion, is working from the same underlying numbers as the report the financier or broadcaster has already seen, with no reconciliation gap to explain.
AVEC is not going to get simpler. The Independent Film Tax Credit, the VFX enhancement, and the wider shift to expenditure credits all point to a system that expects more granular, better evidenced claims than the reliefs it replaced. Finance systems that treat this as a one-off reporting exercise will keep finding themselves reconstructing data under time pressure. Systems that treat it as a live coding structure, built into how costs are tracked from day one, will not.
If you want to talk through how your production's cost coding should be structured for AVEC, including the UK/non-UK split and VFX treatment specifically, speak to Creative Total Media about setting it up properly from the start.
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