Policy paper

Audio-Visual and Video Games Expenditure Credits: administrative measures

Published 30 October 2024

Who is likely to be affected

Film, TV and video game production companies claiming Audio-Visual Expenditure Credits (AVEC) or Video Games Expenditure Credits (VGEC) under Part 14A Corporation Tax Act (CTA) 2009.

General description of the measure

The measure consists of 3 administrative changes to the Part 14A CTA 2009 legislation.

To amend the provision requiring companies to provide cultural certificates from the British Film Institute (BFI) so that it more closely reflects the equivalent provisions under the existing tax reliefs for film, TV and video game production (in Parts 15 to 15B CTA 2009) and is clearer to understand.

To amend the provision preventing deductions for amounts not paid within 4 months of the end of an accounting period, so that it works in the same way as the equivalent provisions under the existing tax reliefs and prevents a mismatch between the accountancy and tax treatment of such amounts.

To correct the procedure for regulations made under Part 14A so that statutory instruments are subject to annulment by the House of Commons only, instead of both Houses of Parliament. This is the standard procedure for statutory instruments pertaining to tax matters.

Policy objective

The amendments relating to BFI certificates and unpaid amounts are intended to ensure qualifying companies can continue to claim relief without disruption. Aligning the Part 14A legislation with the equivalent provisions in the older tax reliefs means the reliefs will continue to operate in a way companies are familiar with and prevents companies from having to change their processes to comply with unexpected new requirements.

The amendment relating to regulations corrects a drafting error, in line with HMRC’s duty to maintain tax legislation.

Background to the measure

Part 14A CTA 2009 was introduced by the Finance Act 2024 and came into effect on 1 January 2024. This measure has not been announced or consulted on previously, since it corrects unintended anomalies in the legislation.

Detailed proposal

Operative date

The amendments affecting BFI certificates and unpaid amounts will have effect for claims made on or after the date of Royal Assent to Finance Bill 2024-25, for all accounting periods.

For claims in relation to accounting periods beginning on or before the date of the Autumn Budget 2024, 30 October 2024, the previous treatment of BFI certificates will also continue to be available.

The amendment affecting regulations will have effect for regulations made on or after the date of Royal Assent.

Current law

All following references are to Part 14A CTA 2009.

The current law relating to the provision of BFI certificates is set out in s1179DJ and s1179FC.

The treatment of amounts not paid within 4 months of the end of an accounting period is covered in s1179DX and s1179FP.

The power to make regulations is contained in s1179AE.

Proposed revisions

S1179DJ and s1179FC will be amended so that the current wording stating a certificate must be in place at the end of an accounting period instead states that the certificate must be valid and in force when it accompanies a claim. A valid certificate is one that has not expired or been revoked.

S1179DX and s1179FP will be changed so that they prevent unpaid amounts from counting towards qualifying expenditure for credit, but allow those amounts to still be deducted as normal for the purposes of calculating profit.

S1179AE will be amended so that statutory instruments making regulations are subject to annulment by the House of Commons only.

The amendments will be published as part of Finance Bill 2024-25.

Summary of impacts

Exchequer impact (£ million)

2024 to 2025	2025 to 2026	2026 to 2027	2027 to 2028	2028 to 2029	2029 to 2030
nil	nil	nil	nil	nil	nil

This measure is not expected to have an Exchequer impact.

Economic impact

This measure is not expected to have any significant macroeconomic impacts.

Impact on individuals, households and families

AVEC and VGEC are only available to companies. The measure will therefore have no impact on individuals, households or families.

Equalities impacts

It is not anticipated that there will be impacts on those in groups sharing protected characteristics. A full equality impact assessment is not recommended.

Impact on business including civil society organisations

The measure is expected to have a negligible impact on around 2,000 businesses claiming the audio-visual creative tax reliefs. One-off costs of familiarisation with the new rules are expected to be negligible, as the measure aligns new legislation with existing rules and so does not require anything new from claimants. The measure will slightly reduce ongoing costs for affected businesses. The measure will not change how businesses interact with HMRC so there will be no impact on business customer experience.

There is no impact on civil society organisations.

Operational impact (£ million) (HMRC or other)

The measure is not expected to have any operational impact, since it will allow HMRC to continue to apply the same treatment as previously. Claimants will not see any changes to systems.

Other impacts

Other impacts have been considered and none have been identified.

Monitoring and evaluation

The measure will be kept under review through regular communication with affected taxpayer groups.

Further advice

If you have any questions about this change, contact the Creative Industries reliefs policy team by email: [email protected].