Industry Responds the UK VFX Tax Credit Uplift Announcement
Photo by Alicja Ziaj on Unsplash
Today (30th 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 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 £175million 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.
UK Screen Alliance has long campaigned to get the cap removed for the VFX spend and for a more competitive rate of credit, as this would allow the VFX industry to achieve its full potential, stimulating economic growth, innovation, and the creation of highly skilled, highly productive jobs in the UK.
Neil Hatton, CEO of UK Screen Alliance, said, “The confirmation in the Budget that the VFX rebate will be available from the New Year is terrific news for the UK’s visual effects companies. We know that productions are making decisions right now on where to place their VFX work for 2025 and beyond. Today’s announcement means that these clients will be incentivised to place many millions of dollars of inward investment work with the UK’s award-winning VFX community, creating considerable value for the UK economy.”
Rt Hon Rachel Reeves MP, the Chancellor of the Exchequer, said, "For our world leading creative industries, we will legislate to provide additional tax relief for visual effects costs in TV and film."
Sir William Sargent, chairman, Framestore Company 3, said, "The UK's place at the heart of the global visual effects industry has been hard-fought, and these changes represent a significant step forward. This is a highly skilled, highly creative and highly innovative sector with technology at its heart, and the strides we make across film, TV, advertising and immersive experiences have wide-ranging benefits for a wide range of industries. As the impact of emerging technologies continues to grow, it is more vital than ever that we future-proof the UK as a place where the best artists, technologists and creative thinkers can push the boundaries of what is possible - these changes will help them do just that.”
Alex Hope OBE, CEO, beloFX said, “VFX is the fastest growing component of the film and high end TV industry. Its skills and technologies are shared across the games industry and wider economy as digital content creation becomes a fundamental tool of all industries. Today’s announcement provides a welcome boost to investment and job creation in this key area of the digital economy. “
Sue Lyster, executive in charge, Industrial Light and Magic, London said, "We're incredibly pleased to hear the announcement of improvements to the VFX tax incentive in the Chancellor's Budget statement. This important step will undoubtedly retain and attract more VFX work to the UK."
Mel Sullivan, chief executive officer, Framestore, said, "The UK's creative industries are the envy of the world, and the VFX industry has played no small part in this reputation. Not only is our work capable of transporting audiences to Hogwarts, Buckingham Palace or Darkest Peru, but it also helps fuel economic growth, drives inward investment, and creates high-quality jobs for brilliant people from a wide range of different backgrounds. It's heartening to see such a vote of confidence in the VFX sector from the UK government, and we look forward to working with them to ensure our industry goes from strength to strength."
Stefano Salvini, general manager, DNEG London said, “The Chancellor’s statement is very welcome news for our industry, and recognises its delivery of considerable economic value and strong potential for further growth. This announcement will incentivise productions to place more highly creative VFX work in the UK, driving technological innovation and crucially creating a significant number of new jobs in our industry. We are grateful that the government has also agreed to bring the implementation date forward, allowing these changes to make an immediate and positive impact on the UK’s VFX sector.”
Antony Hunt, CEO Cinesite Group said, The Chancellor’s announcement is hugely welcome and will reinvigorate the whole industry and the many support jobs it relies on. The film strikes have had a significant impact on our sector so the implementation date being brought forward is a well-earned endorsement of the VFX sector’s importance to the UK future economy and our position as global leaders in creative tech, significant growth will now be unlocked”.
Rachel Penfold, CEO, One of Us said, “Today’s announcement is an enormous win for the UK VFX industry. This very timely support show’s our government’s strong understanding of the vital role our sector plays in the UK’s creative economy. It will help power our growth, our job creation schemes and our innovation - amplifying the UK’s creative influence globally. This decision will help invigorate a vibrant industry and allow us to put our signature UK craftsmanship on even more screens worldwide.”
Tim Caplan, Co-founder, Union VFX said, “This is welcome news. Lifting the cap, increasing the rebate and bringing it forward to January is transformative for the entire industry. These measures turbo boost the restart of the UK film industry which is still recovering from the challenges of covid and the recent industry-wide strikes. This will empower productions to plan with greater optimism, enabling more ambitious projects and nurturing local talent. It will have a strong economic impact for a world leading UK VFX industry that I have no doubt will go from strength to strength.”
Tracy McCreary, MD, BlueBolt said, “This is a very good day for the UK VFX and filmmaking community! We’re delighted that this tax incentive will be effective from January 1st 2025. It will drive growth, and create more jobs, and help position the UK VFX industry as the first choice destination for international film and TV productions after a difficult period.”
Chris Burn, group MD, Milk Visual Effects said, “Today's announcement from the Chancellor is very welcome news for the UK creative sector. This will enable the UK to retain VFX work on UK qualifying productions, driving growth in our world-class visual effects industry. I want to thank Neil and the team at UK Screen Alliance, for their persistence and determination, this a huge boost to the amazing creative talent we have in the UK”.
Michael Illingworth, founder and creative director, Vine FX said, "We are thrilled that the government is launching the rebate even sooner than expected. Starting January 1st is a monumental victory for everyone in the UK VFX industry. Eliminating the 80% cap is a game changer, empowering studios like Vine FX to attract premier projects and elevate our creative capabilities. This is the significant boost our industry has been waiting for and it paves the way for an exciting future ahead!"
Tom Lewis, MD, Lexhag said, "Fantastic news - the accelerated timeline for the VFX tax credit means productions have every reason to get moving right away. With this early start, we can kick off 2025 with serious momentum, keeping the UK competitive and setting the stage for a high-impact year across the industry."
Simon Wilkinson, MD and Co-founder, The Flying Colour Company said, “Having successfully navigated Covid and kept all of our team to the recent downturn in our industry it can be very difficult managing an independent company, so it is excellent news that this proposal has finally gone through and with the improved implementation date it reassures the industry that the Government is following in Gordon Browns footsteps of supporting the creative sector and recognises the hard work and financial contribution the creative sector provides to the economy and country as a whole. Also, Special thanks to Neil Hatton and his excellent team at UK Screen Alliance for tirelessly pushing this proposal, it is very much appreciated.”
Thomas Mattinson, director, Viridian FX said, “The bringing forward of this proposed change to tax policy indicates the new government clearly understands the issues the previous system caused UK based companies with a UK based workforce. As a northern SME working on HETV and international features we lost numerous contracts to overseas companies where alternative incentives for VFX services enable UK based productions that reach the 80% ceiling to gain additional benefit by transferring the work. We belief this should guarantee employment for the wealth of creative technical talent that the North of England is so good at producing.”
Luke Kaile, Head of VFX, Territory Studio said, “The news today is nothing short of fantastic for all the VFX teams across the UK. After an extremely challenging 18 months for people across the industry, this is the exact boost that was required, providing the necessary confidence so that we can all get very excited for the upcoming productions in 2025”
Fi Kilroe, MD, Freefolk said, "A much needed lift for the beaten-down VFX companies and artists. Can't thank Neil, UK Screen Alliance and others who have championed on behalf of the VFX community."
