UK Autumn Budget 2024: UK Creative Industry Responds to NI Rises and VFX Breaks
UK chancellor Rachel Reeves delivered Labour’s first Budget since 2010 on Wednesday – the first after the party’s return to power in July’s general election.
Pledging to raise taxes by £40 billion, the chancellor announced an increase in National Insurance contributions for employers from April, but surprised many by saying the freeze on income tax and National Insurance thresholds will not be extended beyond 2028. Elsewhere was an increase in Capital Gains Tax, a freeze on fuel duty next year and the introduction of VAT on private school fees.
On spending, the budget included a £22.6bn increase in the "day-to-day health budget", £5bn in house building investment, and confirmed funding to extend HS2 to London Euston station.
In possibly the most targeted announcement for our readers, the chancellor also improved tax relief for Britain’s creative industries, particularly for VFX in TV and film. The government has brought forward the start date for its increased VFX tax incentives, announcing that VFX spending in the UK will receive a net rebate of 29.25% and will be exempt from the overall 80% cap on spending eligible for film and TV tax relief from January 1st 2025. This brings it forward from the original expectation of April 1st, made by former chancellor Jeremy Hunt earlier this year.
Here's how the creative industry responded to the Autumn Statement.
Stephen Woodford
CEO
Advertising Association
Advertising Association
The new government repeated their aim today in the Budget to create the conditions for growth. It is important to recognise the vital role that advertising plays in supporting this, by helping businesses of all sizes to compete, innovate and support jobs. Put simply, investment in advertising is an investment in growth. The latest AA/WARC adspend figures, revealed in full tomorrow, demonstrate strong annual growth in UK adspend, well ahead of key European markets. The UK is also a leading exporter of advertising and marketing services around the world, another vital contributor to the future growth of our economy.
The full Budget confirmed the government will take steps to transform the Apprenticeship Levy into a Growth and Skills Levy, through £40 million investment. Much greater flexibility is something our sector and many others have long called for and we look forward to working with the Government to create more effective solutions for businesses looking to develop new talent in our industry.
Paul Bainsfair
Director general
IPA
At PMQs immediately before the Budget, the prime minister reiterated that his government’s number one mission is growth. And the chancellor opened her announcement by stating that the only way to drive growth and restore economic stability was to invest.
Agencies are great growth engines and advertising spend has a multiplier effect on GDP. But the economics of agencies are dominated by payroll. The change to Employer National Insurance contributions represents a very significant increase in the cost base of agencies and threatens their ability to facilitate the growth the government says it is prioritising.
More broadly, agencies stand or fall on their talent. Moreover, shifts in employee rights, will significantly affect how agencies recruit, retain, and nurture the creative minds that are essential to our sector’s success.
The chancellor also announced increases in CGT and the tax paid on carried interest. We are concerned that this may lead to a reduction in appetite for investment in agency businesses, whether by individuals or by financial sponsors.
We just have to hope that this short-term pain will, as the chancellor suggested, ultimately unlock vital long-term growth for the UK economy.
Sir William Sargent
Chairman
Framestore Company 3
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.
Ella Fallows
Head of public affairs, UK
Weber Shandwick
While the chancellor announced £40 billion in tax increases today, a full £25 billion will come from higher employer NICs. This means large companies may feel the pinch and might consider cutting back on expenses like advertising. As an industry, it’s crucial to continue demonstrating the ROI of advertising and exploring new, creative ways to maximise it. R&D investment and support for visual effects spending are protected in today’s Budget, so leveraging technology for effective advertising and using AI to drive efficiency will only strengthen the industry.
Tom Stone
Co-founder
Re:act
The Chancellor’s Autumn Budget finds a complex balance, leaning towards sensible economic growth while addressing immediate fiscal challenges. It’s not a bad budget, but the rise in employer National Insurance is set to squeeze margins across the board, particularly for businesses in hospitality and other high-labour-cost sectors. The minimum wage increase adds further strain, compelling brands to explore efficiency gains to manage tighter profit and loss situations. Nevertheless, by holding VAT and corporation tax steady, Chancellor Reeves is enhancing the UK’s appeal for investment, which is essential for long-term stability. Tackling a substantial £40 billion fiscal gap demands careful navigation, and while the budget aims to set the stage for future growth, the real test will be how brands adapt in the coming months to these new pressures. The road ahead could be challenging for those in affected industries, but the strategy aims to promote resilience and ultimately, the changing nature of business in 2024 is one that we are all very much used to!
Dan Yardley
Chief financial officer and chief operating officer
MSQ
After a couple of years of high inflation pushing up costs and high interest rates pushing down consumer demands – which ultimately puts pressure on our clients – we were all hoping for something that would help return growth to the UK.
A higher tax burden via higher NICs feels like it will add new pressure to costs and make investments harder at precisely the time we wanted the opposite.
For us, to create momentum in this tricky climate, we’re looking at finding new ways to invest in our people and innovate in the way we do business. We have to hope that by doing that, alongside the broader investments being reported, leads to some growth in the medium and long term.
Mel Sullivan
Chief executive officer
Framestore
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.
Charlie Griffith
Managing director
UNBOUND
Cometh the hour, cometh the independent agency who certainly won't be walking into this sleeping. It won’t be an easy period for anyone but, traversed with caution, the ability to be nimble and flex some ninja-like agility will go a long way. Smaller shops like Unbound are lean for all the right reasons; clients get the people they need and won't be paying for those they don’t. The bigger one-stop-shops haven’t the luxury of changing their more traditional ways of working with immediate efficiencies for their clients. I predict brands will look again to the savvier specialists to service their needs in ways that remain mutually beneficial.
Emma Thompson
Head of agency
Golley Slater
Spend today don’t save for tomorrow!
By raising capital gains tax, Labour are encouraging a ‘spend, not save’ mindset.
I think in response to this, those who have money to save will choose to spend it today rather than save it tomorrow.
There has already been an enormous apathy from a consumers during COL crisis. So much has happened in the past 5 years, this mini budget unlikely to have any change to spending habits, if not but increase them, so this won’t change how they do things habitually, either.
I suspect the result will see more buying than saving savers over next few months.
With a risk next year of taxing pensions at point of entry maybe there will be a dip in pension contribution and a rise in ISA. And a buy for today mentality - especially in travel at tax is only increased for schedule airlines only raised by £2.
