Will Hunt’s tax changes for the film industry give the glittering effect he wants?

Will Hunt’s tax changes for the film industry give the glittering effect he wants? Shona November 24, 2023

The UK government has committed to providing increased support for the creation of visual effects in films and TV shows, aiming to strengthen this country’s position as a preferred location for Hollywood productions. Despite the UK’s popularity for shooting major films, concerns have been raised about the current system of tax breaks, leading some productions to opt for visual effects services abroad.

Chancellor Jeremy Hunt, in his Autumn Statement, pledged additional tax relief to address these challenges. He has extended the 5% uplifted relief under AVEC to animated films from 1 January 2024. The UK Screen Alliance, representing the visual effects (VFX) industry, applauded the announcement. In testimony to a House of Commons committee, the Alliance had previously emphasised that the existing tax structure often discourages VFX work here, prompting companies to expand overseas. 

The government’s consultation document acknowledged reports of visual effects activities relocating overseas, prompting some UK-based companies to focus their growth abroad. VFX – the digital manipulation of images to enhance or replace elements in films or TV, is crucial to the wider industry. 

Following the announcement, Neil Hatton, CEO of the UK Screen Alliance, expressed optimism about the new measures, emphasising the need to position this country as the primary choice for international VFX production. The government aims to implement additional tax relief for visual effects from April 2025 and is seeking industry input on the specifics of the new measures. 

As part of the Statement, the government anticipates a boost in employment within the creative industries as they embrace new technologies. However, some industry bodies, like Pact, representing production companies, argue that the government’s efforts fall short, highlighting concerns about the independent film sector reaching a critical juncture of market failure. According to Pact, the Chancellor missed an opportunity to address this, noting a consistent decline in investment in indie films and the increasing difficulty producers face in securing financing in the current challenging market. 

If you work in the film and TV industry and want to discuss how the tax changes might affect you, then let’s chat.