The UK's AVEC changed the relief mechanism, not just its name

The stage

HM Revenue & Customs' claiming guidance, published 19 January 2024 and last updated 19 February 2026, states that a company can claim the Audio-Visual Expenditure Credit (AVEC) “on expenditure incurred from 1 January 2024” on film, high-end TV, children's TV and animation. The change was announced earlier in HMRC's policy paper Reform of audio-visual creative tax reliefs, published 22 November 2023, which set the new credit rate at 34% for film, high-end TV and video games, and 39% for animation and children's TV, both described as a “slight increase” on the schemes AVEC replaced.

What the documents establish

The two documents serve different functions the entry keeps separate: the 2023 policy paper is a dated announcement of what changed and why; the 2024 guidance is a living how-to-claim page, current as retrieved on 16 September 2026, not a fixed historical record. Together they establish that AVEC replaced the prior film, high-end TV, animation and children's TV tax reliefs with an above-the-line taxable credit, in place of the previous additional-deduction-or-loss-surrender mechanism, and that the qualifying criteria, including the 80% cap on qualifying expenditure and BFI cultural-test certification, mostly carried across unchanged. Neither document mentions virtual production, LED volumes or ICVFX anywhere; both apply the same mechanism regardless of whether a production uses a physical location, a soundstage or a volume.

The department view

The change lands first on production finance and the production accountant, not on the virtual-production department directly: a volume day's cost now flows into an above-the-line credit calculation rather than a deduction against profit, which changes the cash-flow timing a finance plan can assume, whether or not any of the shoot happens on an LED stage. The BFI's cultural-test certification requirement, unchanged by AVEC, still gates eligibility before any credit rate question arises.

What to check before you build

Editorially: do not describe AVEC as a virtual-production incentive, since neither HMRC document names the technology; check that a production has BFI British certification before assuming AVEC eligibility for any of its costs, LED-stage or otherwise; and check the claiming guidance's own last-updated date before relying on a cited detail, since it is a living page that HMRC continues to revise.

• Was the expenditure being discussed incurred before or after 1 January 2024, and which relief regime actually applies?
• Has the production received BFI cultural-test certification, independent of any virtual-production claim?
• Does a cited AVEC detail match the claiming guidance's current, dated last-updated version rather than an earlier one?

AVEC is a general restructuring of how UK audio-visual production claims relief, dated from 1 January 2024 by HMRC's own guidance, and it says nothing about virtual production one way or the other.