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Today (30 October 2024), the Chancellor of the Exchequer confirmed an increased tax incentive for spending on visual effects ("VFX") in the UK, which has been warmly welcomed by the UK’s VFX industry.

Delivering Labour’s first Budget since coming to power in the July general election, Rachel Reeves announced that VFX spending in the UK will attract a net rebate of 29.25% and would be exempt from the overall 80% cap on spending eligible for News Today film and TV tax relief.

This had been proposed by the previous government in March 2024, but the early election meant that the uplift was not implemented, leading to an anxious wait for the UK’s VFX community.

The Labour government has identified the creative industries as one of eight growth-driving sectors within its Industrial Strategy, and the confirmation by the Chancellor of the VFX uplift, means that the UK is now set to attract an additional £175 million per year of spending on VFX for film and TV, an increase of over 45%, and to create 2,800 new jobs.

In a very welcome addition, requested by the UK Screen Alliance, the Chancellor has brought forward the starting date of the uplift, originally expected to be 1st April 2025, so that VFX spending incurred in the UK from 1st January 2025 will be eligible for the new incentive.

This will avoid productions delaying their spend in order to qualify for the rebate, at a time when VFX companies need to get the work flowing as they recover from last years writers’ and actors’ strikes, and the general production slowdown. Claims for the rebate can be made from 1st April.

Earlier this year, the Treasury had proposed to exclude costs relating to Generative AI from the VFX uplift.

However, following consultation with the industry, this proposal has now been dropped.

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