Film Tax Relief in 2026: How Much Can You Actually Claim Back?

If you're a film production company in the UK, there's a good chance you're entitled to a significant tax credit on your production costs. But the system has changed recently, and a lot of the information out there is out of date. This guide covers exactly how film tax relief works in 2026, what you can claim, how much it's actually worth, and what you need to do to get it.

The Big Change: Film Tax Relief Is Now AVEC

The old Film Tax Relief (FTR) that many producers were familiar with has been replaced. From 1 April 2025, all new film productions must claim under the Audio-Visual Expenditure Credit (AVEC). The old FTR scheme will close entirely for all productions on 1 April 2027.

If your film started principal photography before 1 April 2025, you may still be able to claim under the old FTR rules. But if you're starting a new production now, AVEC is your route.

The good news: AVEC is actually more generous than the old system in most cases. It's an "above the line" taxable credit, which means it's treated differently in your accounts, but the bottom line is that you're getting back more money on your qualifying spend.

What Are the Rates?

This depends on the type of film you're making:

A Worked Example: Standard AVEC

Let's say you're a UK film production company. Your film has total global core expenditure of £1 million, of which £850,000 was spent in the UK.

The £272,000 gross credit is set against your Corporation Tax liability. After accounting for tax on the credit, the net benefit is £204,000. If you don't have sufficient tax liability to absorb it, the credit comes back to you as a cash payment from HMRC.

A Worked Example: Independent Film Tax Credit (IFTC)

Now let's say you're making a lower-budget British film with total core expenditure of £5 million, all spent in the UK.

That's a return of nearly 32% on your total production budget - a genuinely transformational amount for an independent film.

Do You Qualify for the IFTC?

The Independent Film Tax Credit is the enhanced rate designed to support British independent filmmaking. To qualify, your film must:

• Meet all the standard AVEC requirements (BFI cultural certification, UK production company, intended for theatrical release, at least 10% UK core expenditure)
• Have started principal photography on or after 1 April 2024
• Have total core expenditure of up to £15 million (films with budgets between £15 million and £23.5 million can claim IFTC on the first £15 million only, with the credit tapering)
• Meet the creative connection requirement - at least one of: the lead director is a UK citizen or resident, the lead writer is a UK citizen or resident, or the film is an official UK co-production

The maximum IFTC credit any single film can receive is £6.36 million.

One important point: if you claim IFTC, you cannot also claim the separate VFX uplift on the same production. The 53% IFTC rate was calculated with VFX costs in mind, so it's one or the other.

What Counts as Qualifying Expenditure?

Core expenditure that qualifies for AVEC includes costs incurred during:

• Pre-production - script development (once the project is green-lit, not speculative development), casting, location scouting, set design, scheduling
• Principal photography - crew salaries, equipment hire, studio costs, location fees, catering and transport for cast and crew, set construction
• Post-production - editing, sound design, music recording, colour grading, VFX, dubbing

What doesn't qualify:

• Development costs incurred before the production is committed to (speculative work)
• Marketing and distribution costs
• Financing costs
• Costs incurred outside the UK (these don't count toward your UK core expenditure)

Staff costs, subcontractor fees, freelancer payments, and goods are all eligible provided the work is carried out in the UK. There's no restriction on the nationality of the people doing the work - what matters is where the work physically takes place.

The BFI Cultural Test

To qualify for any film AVEC, your production must be certified as British by the British Film Institute. This is a points-based assessment that looks at:

• Cultural content - whether the film is set in the UK, features British characters, or is based on British subject matter
• Cultural contribution - whether it represents creativity, innovation, or British culture
• Cultural hubs - where key production activities take place (pre-production, shooting, post-production, music)
• Cultural practitioners - the nationality/residency of key creative roles (director, writer, producer, composer, lead actors)

You need a minimum number of points to pass. Most films with significant UK involvement will qualify, but it's worth checking early. You can apply for an interim certificate during production, which allows you to start claiming before the film is finished, and then a final certificate on completion.

The BFI aims to process applications within 28 days, but the earlier you apply, the better for your cash flow planning.

How Long Does the Process Take?

A typical AVEC claim involves several steps:

• Applying to the BFI for cultural certification (this must be done first to establish if the production qualifies - BFI currently take 6-8 weeks to issue certificates)
• Preparing the claim and supporting documentation
• Submitting the Additional Information Form (AIF) to HMRC - this is mandatory from April 2024 and must be submitted before or on the same day as your Corporation Tax return
• HMRC reviewing and processing the claim

You can claim AVEC through your Corporation Tax return (CT600). From 6 April 2026, you must also include the CT600P Creative Industries supplementary page.

Claims can be made, amended, or withdrawn up to two years after the end of the period of account the claim relates to. So you do have time - but earlier claims mean earlier cash.

Can You Claim AVEC and R&D Tax Credits?

Yes, potentially - but not on the same costs. If your film production involves genuinely innovative technical work (developing new VFX techniques, building bespoke production software, pioneering new camera or sound technology), that specific work might qualify for R&D tax credits separately from your AVEC claim. The key rule is no double-dipping: any costs claimed under AVEC cannot also be claimed under R&D relief, and vice versa.

This is an area where specialist advice is essential, because getting the split right can significantly increase your total claim value.

What Should You Do Next?

If you're a UK film production company - whether you're making features, shorts, documentaries, or animation - and you haven't explored AVEC, you're very likely leaving significant money unclaimed.

The process isn't as complicated as it looks, but it does require specialist knowledge of both the BFI certification process and the HMRC claim mechanics. That's why we connect filmmakers directly with qualified tax advisors who specialise in creative industry reliefs.

Find out if you qualify - it takes two minutes and it's completely free.