Creative Industry Tax Reliefs UK: What Business Owners Need to Know

Creative industry tax reliefs in the UK are a set of corporation tax reliefs designed to support the production of culturally significant creative content. They cover film, high-end television, animation, children's television, video games, theatre, and orchestral concerts. If your business produces any of these, you could be reducing your corporation tax bill significantly.

These reliefs work by allowing you to claim an additional deduction against your taxable profits, or in some cases a payable tax credit if you are loss-making. The rules differ by sector, but the principle is the same: spend money on qualifying creative production in the UK, and the government shares some of the cost through the tax system.

We work with creative businesses across the UK, from independent film producers in Manchester's Northern Quarter to video game studios in Leith and theatre companies in Bristol's Harbourside. This guide covers the main reliefs, who qualifies, how to calculate them, and the practical steps to claim.

Which Creative Industry Tax Reliefs Exist?

The creative industry tax reliefs each have their own set of qualifying conditions, rates, and claim procedures. The main ones are:

• Film Tax Relief (FTR) - for films intended for theatrical release
• High-End Television Tax Relief (HTR) - for TV productions meeting cost and slot criteria
• Animation Tax Relief (ATR) - for animated productions
• Children's Television Tax Relief (CTR) - for children's TV content
• Video Games Tax Relief (VGTR) - for video game development
• Theatre Tax Relief (TTR) - for theatrical productions
• Orchestra Tax Relief (OTR) - for orchestral concerts

Important: from 1 April 2025, FTR, HTR, ATR, CTR, and VGTR are closed to new productions. These have been replaced by the Audio-Visual Expenditure Credit (AVEC) for film, TV, animation, and children's television, and by the Video Games Expenditure Credit (VGEC) for video games. The legacy reliefs end entirely from 1 April 2027. Theatre (TTR) and orchestra (OTR) continue to use the additional-deduction mechanism described below. The sections on FTR, HTR, ATR, and VGTR below cover the legacy position, which applies only to productions already underway before 1 April 2025.

Each relief is claimed through your company's corporation tax return (CT600). The claim process is similar across the reliefs, but the qualifying tests differ. We will walk through the most common ones first.

Film Tax Relief (FTR)

Film Tax Relief is the oldest creative industry tax relief, introduced in 2007. It applies to films that are intended for theatrical release. The film must pass a cultural test administered by the British Film Institute (BFI) to qualify as a British film, or qualify under an official co-production treaty.

Note: FTR is a legacy relief, closed to new film productions from 1 April 2025. New film productions use AVEC (Audio-Visual Expenditure Credit) instead. The following describes the legacy FTR mechanism for productions already underway before that date.

Under the legacy FTR, you calculate your qualifying expenditure on the film. You can claim an additional deduction equal to the lesser of your UK core expenditure and 80% of your total core expenditure. If that creates a loss, you can surrender a qualifying loss for a payable tax credit at 25%. The surrenderable loss is capped at the additional deduction.

Let's use a real example. A Manchester-based independent film company spends £400,000 on a qualifying British film. Core expenditure is £380,000, all of it in the UK. The additional deduction is £304,000 (80% of £380,000, which is lower than the £380,000 UK core spend). If the company has no other income, the loss created is £704,000 (the £400,000 actual spend plus the £304,000 additional deduction). Under the legacy FTR, the surrenderable loss is capped at the additional deduction. The payable credit is therefore £76,000 (25% of £304,000). That is a significant cash injection for a production company.

Cultural Test for Film

The BFI cultural test awards points across four categories: cultural content, cultural contribution, cultural hubs, and cultural practitioners. You need at least 18 out of 35 points to pass. The test is not as daunting as it sounds. Most UK-focused productions pass comfortably. The BFI has a dedicated team that processes applications within 28 days for most cases.

High-End Television Tax Relief (HTR)

High-End Television Tax Relief covers TV productions that meet two key thresholds. First, the production must have a minimum slot length of 30 minutes per episode. Second, the average production cost per hour of slot length must be at least £1 million.

This relief is particularly relevant for drama, documentary, and factual entertainment series. Game shows, talk shows, and sports coverage do not qualify. The production must also pass the same BFI cultural test as films, or qualify under a co-production treaty.

Note: HTR is a legacy relief, closed to new high-end TV productions from 1 April 2025. New productions use AVEC instead.

Under the legacy HTR, the relief mechanism is the same as FTR. The additional deduction is the lesser of UK core expenditure and 80% of total core expenditure. If loss-making, you can surrender a qualifying loss (capped at the additional deduction) for a payable credit at 25%.

A practical example. A Bristol-based production company spends £2.2 million on a six-part documentary series for a UK broadcaster. Each episode is 60 minutes. The average cost per hour is £2.2 million divided by 6 hours, which is £366,667 per hour. That is below the £1 million threshold, so this series would not qualify for HTR. But if the same company produces a drama series costing £8 million for six 60-minute episodes, the average cost per hour is £1.33 million. That qualifies.

Animation Tax Relief (ATR)

Animation Tax Relief covers animated productions, whether film or television. The same BFI cultural test applies. There is no minimum slot length or cost per hour threshold for ATR. Note: ATR is a legacy relief, closed to new animation productions from 1 April 2025; new productions use AVEC instead. Under the legacy ATR, the additional deduction is the lesser of UK core expenditure and 80% of total core expenditure, with a payable credit of 25% of the surrenderable loss (capped at the additional deduction).

ATR is popular with smaller animation studios. A studio in Sheffield's Kelham Island producing a 10-minute animated short for a streaming platform can claim ATR if it passes the cultural test. The qualifying expenditure includes storyboarding, character design, voice recording, animation, and post-production.

Video Games Tax Relief (VGTR)

Video Games Tax Relief supports the development of British video games. The game must pass its own cultural test, administered by the BFI, requiring at least 16 out of 31 points. The test covers British cultural content, contribution to British culture, use of British locations and personnel, and use of English or other UK languages.

Note: VGTR is a legacy relief, closed to new video game productions from 1 April 2025. New game developments use the Video Games Expenditure Credit (VGEC) instead. The following describes the legacy VGTR mechanism.

Under the legacy VGTR, you get an additional deduction of 80% of qualifying core expenditure. The payable credit rate is 20% for loss-making companies, with the surrenderable loss capped at the additional deduction. This is lower than the film and TV rates, but still valuable for studios working on games started before 1 April 2025.

A worked example. A video game studio in Dundee spends £500,000 developing a qualifying game. Core expenditure is £450,000. The additional deduction is £360,000 (80% of £450,000). If the studio has no other income, the loss is £860,000 (£500,000 actual spend plus £360,000 additional deduction). Under the legacy VGTR, the surrenderable loss is capped at the additional deduction. The payable credit is therefore £72,000 (20% of £360,000).

VGTR is claimed through the corporation tax return, supported by the BFI cultural certificate and a breakdown of the qualifying expenditure.

Theatre Tax Relief (TTR)

Theatre Tax Relief covers theatrical productions, including plays, musicals, opera, ballet, and dance. The production must be intended for public performance before a paying audience. It does not cover amateur productions, film or TV adaptations, or productions that are primarily educational.

TTR has two rates. From 1 April 2025 the payable credit rates are permanently 45% for touring productions and 40% for non-touring productions. Before the temporary uplift introduced in 2021, the rates were 25% touring and 20% non-touring; those older figures no longer apply. Also from 1 April 2025, eligible expenditure narrows to goods and services used or consumed in the UK.

A touring theatre company based in Liverpool's Baltic Triangle spends £300,000 on a qualifying production. Core expenditure is £280,000, all of it in the UK. The additional deduction is capped at 80% of core expenditure, so it is £224,000 (80% of £280,000). If loss-making, at the 45% touring rate that applies from 1 April 2025, the payable credit is £100,800 (45% of £224,000, as the surrenderable loss is capped at the additional deduction).

Orchestra Tax Relief (OTR) and Museums and Galleries Exhibition Tax Relief (MGETR)

Orchestra Tax Relief covers orchestral concerts that are open to the public and involve at least 12 musicians. From 1 April 2025 the payable credit rate is permanently 45% for orchestral concerts, and eligible expenditure must be used or consumed in the UK. This is less commonly claimed but relevant for professional orchestras and concert promoters operating through a limited company.

Museums and galleries exhibition tax relief has its own rules; check the current position on GOV.UK.

Qualifying Core Expenditure

All creative industry tax reliefs share a common concept: qualifying core expenditure. This is the spending that directly relates to the creative production. It includes pre-production, principal photography or development, post-production, and digital or visual effects. It does not include marketing, distribution, financing costs, or general overheads.

For most reliefs, at least 10% of the qualifying core expenditure must be on goods or services provided from within the UK. This is the UK expenditure condition. If your production spends heavily overseas, you may not meet this threshold.

For film, HTR, animation, and children's television, the qualifying core expenditure is the total production budget minus any non-qualifying costs. For video games, it is the development costs minus non-qualifying items. For theatre and orchestra, it is the production costs for the specific run of performances.

How to Claim Creative Industry Tax Reliefs

In broad terms, the production or development company claims through its corporation tax return (CT600), together with the additional information form that HMRC now requires for creative-sector claims. The claim reflects the qualifying expenditure for the accounting period and, where a loss arises, any surrender for a payable credit.

Most of the reliefs also depend on cultural certification from the BFI, and all of them depend on good records of what was spent and where. The detail of preparing a claim is specialist territory, and the right course is to take advice from an adviser experienced in the specific relief before committing to a claim.

Common Mistakes and Pitfalls

At a high level, claims most often go wrong in three areas: treating non-qualifying costs (marketing, distribution, financing) as core expenditure, missing the minimum UK expenditure condition, and missing the claim window (broadly, two years from the end of the relevant accounting period). Each of these is fact-specific, which is another reason claims belong with a specialist adviser.

Also, do not confuse creative industry tax reliefs with R&D tax credits. They are separate reliefs with different rules. Some creative businesses qualify for both, but the same expenditure cannot be claimed twice. We cover R&D tax credits on our R&D tax credits page.

Creative Industry Tax Reliefs vs R&D Tax Credits

Creative industry tax reliefs and R&D tax credits are often mentioned together, but they serve different purposes. Creative industry reliefs support the production of culturally significant creative content. R&D tax credits support technological innovation. A video game studio might claim VGTR for the game development and R&D credits for developing a new graphics engine. The two claims must be separate, and the same expenditure cannot be claimed under both reliefs.

If your business is involved in both creative production and technological innovation, speak to an accountant who understands both reliefs. Our services page covers how we help creative businesses navigate these complex areas.

Current Creative Relief Rates at a Glance (Dated)

The table below sets out the current headline rates for the reliefs that apply to new productions, with the date each rate took effect. All of these are corporation tax reliefs claimed by the company.

Relief	Rate	Applies from	Notes
AVEC: film and high-end TV	34% expenditure credit	Expenditure from 1 January 2024	Qualifying expenditure capped at 80% of total core costs; minimum 10% of core costs on UK activities
AVEC: animation and children's TV	39% expenditure credit	Expenditure from 1 January 2024	Same 80% cap and 10% UK minimum
Independent Film Tax Credit (within AVEC)	53% expenditure credit	1 April 2025 (principal photography on or after 1 April 2024)	Core costs under £23.5 million; relief capped at £15 million of core costs
AVEC: visual effects costs	39% expenditure credit	1 April 2025	For 34%-rate productions; VFX costs sit outside the 80% cap
VGEC: video games	34% expenditure credit	Expenditure from 1 January 2024	New games must use VGEC from 1 April 2025; legacy VGTR ends entirely on 1 April 2027
Theatre Tax Relief	40% non-touring / 45% touring	Permanent from 1 April 2025	Expenditure must be used or consumed in the UK from 1 April 2025
Orchestra Tax Relief	45%	Permanent from 1 April 2025	Same used-or-consumed-in-the-UK test

One point the headline rates hide: the AVEC and VGEC expenditure credits are themselves taxable, in the same way as the R&D expenditure credit. The net benefit to the company is therefore lower than the headline percentage. They are not tax-free cash.

Who Claims Creative Industry Tax Reliefs?

The claimant is always the company. For AVEC and VGEC that means the production or development company responsible for the film, programme, or game; for theatre and orchestra reliefs it means the production company staging the performances. An individual actor, musician, writer, or crew member cannot claim any of these reliefs personally, even when their work is central to a qualifying production.

If you are an individual creative working on a qualifying production, the relief does not change your own tax position. You are paid and taxed in the usual way, whether as an employee, a self-employed performer, or through your own company. The production company's relief claim happens entirely at company level. What it can mean in practice is better-funded productions and, for lower-budget independent film, more projects getting made under the 53% Independent Film Tax Credit.

Practical Steps for Creative Businesses

If you run a creative business and think a production might qualify, the practical position is simple: understand which relief (or expenditure credit) applies to your sector, be aware that cultural certification and the UK expenditure condition sit at the heart of most claims, and take specialist advice early rather than after the accounting period has closed. The rules are specific, and the reliefs are claimed at company level through the corporation tax return.

Creative industry tax reliefs can make a significant difference to your bottom line. Under the legacy FTR mechanism, the worked example above shows a film production with £380,000 core expenditure generating a £76,000 payable credit (25% of the £304,000 capped additional deduction). Under TTR at the permanent 45% touring rate from 1 April 2025, a £300,000 theatre tour can generate a £100,800 credit (45% of the £224,000 additional deduction). For small and growing creative businesses, that cash can fund the next production or pay down debt.

If you are an individual creative wondering how a qualifying production affects your own tax position, or a business owner weighing up where these reliefs fit, specialist advice is the right next step.