Section 26 | Films and television programmes: increased relief for visual effects

(1)In Part 14A of CTA 2009 (films, television programmes and video games), after section 1179EB insert—

1179ECSpecial credit for visual effects

(1)This section applies in relation to a qualifying film or qualifying television programme.

(2)The production company is entitled to claim an additional amount of audiovisual expenditure credit for an accounting period (“the claim period”) that is the completion period (see section 1179DY) or a subsequent accounting period if—

(a)the company has incurred relevant visual effects expenditure on the film or programme in that period or an earlier accounting period, and

(b)where a claim has been made for Chapter 3 credit (whether for the claim period or earlier), the relevant percentage for the purposes of all such claims was the percentage given by subsection (2) or (5) of section 1179DV.

(3)The additional amount is equal to—

(a)39% of the total amount of the relevant visual effects expenditure incurred on the film or programme in the claim period and in previous periods, less

(b)the sum of—

(i)where Chapter 3 credits have been claimed by the production company, the adjusted VFX portion of those credits, and

(ii)any additional amounts of audiovisual expenditure credit previously claimed under this section.

(4)Take the following steps to determine the adjusted VFX portion of previously claimed Chapter 3 credits—

Step 1 (identify the total UK expenditure in the AVEC period) Determine the total amount of the company’s relevant global expenditure (see section 1179CA(2)) that—

is UK expenditure (see section 1179AB), and

was incurred for accounting periods falling within the company’s AVEC period.

Step 2 (identify the amount of visual effects expenditure) Determine how much of the result of Step 1 is relevant visual effects expenditure.

Step 3 (determine the extent to which the 80% cap applied) Determine the amount (if any) of the excess to be deducted at Step 3 in section 1179CA(1) for the most recent accounting period for which a claim for Chapter 3 credit was made (which may be the claim period). If that amount is nil go to Step 4, otherwise go to Step 5.

Step 4 (where the 80% cap did not apply, calculate the adjusted VFX portion) If this Step applies, the adjusted VFX portion is the amount given by multiplying—

the sum of Chapter 3 credits claimed by the production company, by

the amount given by dividing the result of Step 2 by the result of Step 1.

Step 5 (treat the 80% cap as affecting the VFX portion first) Subtract the result of Step 3 from the result of Step 2. If the result is nil or less, the adjusted VFX portion is nil. If not, go to Step 6.

Step 6 (calculate the adjusted VFX portion, taking account of the 80% cap) If this Step applies, the adjusted VFX portion is the amount given by multiplying the result of Step 5 by 0.34.

(5)The Treasury may by regulations replace—

(a)the percentage for the time being specified in subsection (3)(a), or

(b)the number for the time being specified in Step 6 in subsection (4) as the number by which the result of Step 5 in that subsection is multiplied.

(6)Sections 1179C and 1179CB to 1179CI (treatment of expenditure credits) apply to the additional amount as they apply to an expenditure credit under Chapter 3.

(7)In this section—

a company’s “AVEC period” means the period beginning with the commencement of the first accounting period for which this Part applies further to the election by the company under section 1179B(1) and ending with the end of the claim period;

“Chapter 3 credit” means an audiovisual expenditure credit in respect of the film or television programme determined under section 1179CA;

“relevant visual effects expenditure” means UK expenditure that—

is incurred in respect of relevant visual effects work carried out in the United Kingdom, and

counts as relevant production expenditure for the purposes of section 1179CA(2) (see section 1179DR);

“relevant visual effects work” means work consisting of the use of computer technology to create or alter images for inclusion in the film or programme.

(2)The amendment made by subsection (1) has effect only in relation to expenditure incurred on or after 1 January 2025.

(3)A claim for audiovisual expenditure credit may not be made in reliance on that amendment before 1 April 2025.