The UK Screen Alliance has welcomed plans announced by Chancellor Jeremy Hunt to offer additional tax relief for expenditure on visual effects. 

Hunt announced his in Autumn Statement this week a call for evidence to inform the development of detailed proposals for enhanced tax relief for visual effects. 

ITV virtual production

Virtual production: Tax relief for expenditure

In a fore word to the consultation document the Chancellor said: “I can confirm that we will provide more additional tax relief for expenditure on visual effects, to boost the international competitiveness of the UK’s offer. This call for evidence takes the first, crucial step towards this, as it will provide the Government with the depth of understanding it needs to develop targeted proposals that best serve the needs of the visual effects industry.” 
The UK Screen Alliance has long campaigned for reform to the UK’s screen sector tax credits, arguing that the way they are structured disadvantages VFX.  

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Productions receive 25% relief on their UK production expenditure, but once that spend exceeds 80% of their global production budget, there is no further relief in the UK.  

The unintended consequence of this, says the UK Screen Alliance, is that VFX work, which is not tied to where filming takes place, and is therefore the most ‘portable’ part of the budget, can easily be moved outside of the UK to a jurisdiction that will make tax relief available.  

An analysis of UK production between 2017 and 2019, reveals that £1bn of VFX expenditure on projects qualifying for UK Tax relief was carried out overseas – this is approximately half of all VFX work carried out on UK-qualified productions in that time period. 

Neil Hatton, CEO of UK Screen Alliance, said, “This consultation and the promise of a more competitive incentive, should aim to position the UK as the first choice destination for VFX production for international film and TV. We are focussed on capturing a larger market share as global demand for VFX recovers, following the US actors’ strike, and we aim to play a full part in growing the UK’s Creative Industries towards the Government’s 2030 targets.” 
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