High-End Television and Animation Tax Relief (HETV) UK 2026: How Studios Claim

The UK creative industries benefit from some of the most competitive fiscal incentives in the world. For television studios and animation houses, the Audio-Visual Expenditure Credit (AVEC) — which replaced the older High-End Television (HETV) Tax Relief and Animation Tax Relief from 1 January 2024 — provides a significant above-the-line tax credit that can transform production financing.

This guide explains how AVEC works for HETV and animation in 2026/27, who qualifies, how much can be claimed, and the practical steps to making a successful claim.

What Is the Audio-Visual Expenditure Credit (AVEC)?

The AVEC is the successor to the old suite of UK creative industry tax reliefs, including HETV Tax Relief, Animation Tax Relief, Film Tax Relief, and Children's Television Tax Relief. From 1 January 2024, all new productions must use the AVEC framework. Productions that began under the old reliefs before 1 January 2024 can continue under the legacy rules until 31 December 2024, after which all claims must use AVEC.

The key structural difference is that AVEC is an above-the-line credit. Under the old system, the relief reduced Corporation Tax; under AVEC, the credit is recognised as taxable income in the company's accounts, then used to reduce the tax bill. This improves cash flow and balance sheet presentation, particularly for production companies that may be loss-making in early years.

HETV AVEC Rate: 34%

High-end television programmes that meet the qualifying conditions receive an AVEC of 34% of qualifying UK core expenditure. This rate applies to dramas, comedies, documentaries, and live-action series.

Animation AVEC Rate: 39%

Animation productions attract a higher 39% AVEC rate. This recognises the significant skilled labour intensity of animation and the UK government's ambition to maintain the UK as a global animation hub.

Who Qualifies for HETV AVEC?

The Qualifying Programme Test

A programme qualifies as high-end television if it meets all of the following conditions:

• It is a drama, comedy, documentary, or animation — game shows, news, current affairs, quiz programmes, and reality television are excluded.
• Each episode has a minimum slot length of 20 minutes.
• The production has minimum average core expenditure of £1 million per broadcast hour. For a 12-episode series with 45-minute episodes, total core expenditure must therefore be at least £9 million.
• The programme is intended for broadcast to the general public — content made purely for commercial or training purposes is excluded.

The UK Expenditure Test

The production must spend at least 10% of its total core expenditure in the UK. This is a minimum threshold, not a cap. The more UK expenditure there is, the larger the potential credit, up to the 80% cap described below.

The Cultural Test

The programme must be certified as a qualifying British programme by the British Film Institute (BFI). This is done by passing the Cultural Test, a points-based assessment that considers factors such as the nationality of cast and crew, the UK setting of the story, and the use of UK locations. Productions need at least 18 out of 35 possible points to qualify.

Company Qualification

The claiming company must be the production company responsible for making the programme, and it must be within the charge to UK Corporation Tax. Special Purpose Vehicles (SPVs) set up specifically for a production are common and entirely acceptable.

What Counts as Core Expenditure?

Core expenditure is expenditure on activities that are directly involved in producing the programme. This broadly covers:

• Pre-production: script development, storyboarding, location scouting.
• Principal photography / recording: cast fees, crew wages, equipment hire, location costs, studio hire.
• Post-production: editing, visual effects, sound mixing, colour grading.

It does not include distribution costs, marketing, financing costs, or general overhead that is not directly attributable to the production.

The 80% UK Cap

Only UK core expenditure counts for AVEC purposes, and this is subject to a cap of 80% of total core expenditure. So if a production spends £15 million in total and £14 million of that is UK-qualifying, the credit base is capped at £12 million (80% of £15 million), not £14 million.

This cap is designed to prevent productions from inflating UK spend artificially.

How Much Can a Production Claim?

HETV Example

A drama series has total core expenditure of £10 million. Of this, £8 million is UK-qualifying expenditure, which equals the 80% cap exactly.

• Qualifying UK expenditure: £8 million
• AVEC at 34%: £2.72 million

The credit of £2.72 million is first applied to reduce the company's Corporation Tax liability. If the credit exceeds the tax liability — which is common in loss-making productions — the excess can be paid out as a cash payment from HMRC. This makes AVEC particularly valuable for productions that are not yet profitable.

Animation Example

An animated children's series has total core expenditure of £5 million, all of which is UK-qualifying (meeting the 80% cap automatically).

• Qualifying UK expenditure: £4 million (80% cap of £5 million)
• AVEC at 39%: £1.56 million

How to Claim AVEC

Step 1: Register with the BFI and Apply for Certification

Before claiming, the production company should apply to the BFI for a Interim Certificate early in production, based on the planned content. A Final Certificate is issued once the programme is complete. HMRC requires the Final Certificate for a claim to be processed.

Step 2: Set Up Cost Tracking

Rigorous bookkeeping is essential. The company must maintain detailed records separating UK core expenditure, non-UK core expenditure, and non-core expenditure. Production accounting software that produces compliant schedules is strongly recommended.

Step 3: File the Corporation Tax Return

The AVEC claim is made in the CT600 (Corporation Tax return) and the supplementary CT600K form. The credit is included in the company's taxable income and then applied against the Corporation Tax liability.

Step 4: Receive Payment or Offset

If the AVEC credit exceeds the Corporation Tax due, HMRC pays the balance as a cash repayment. HMRC typically processes AVEC claims within 30 days for straightforward cases, though complex productions may take longer.

Interaction With Other Reliefs

AVEC cannot be claimed alongside the old HETV, Animation, or Film Tax Relief on the same production. Productions that began under the old framework before 1 January 2024 and continued under legacy rules until 31 December 2024 must now transition fully to AVEC.

Co-productions may be able to access treaty benefits depending on which countries are involved. The UK has bilateral co-production treaties with numerous countries, and certified co-productions may have relaxed UK expenditure requirements in some cases.

Practical Considerations for International Studios

Many US studios, streaming platforms, and international broadcasters produce content in the UK specifically to access AVEC. Common structures include:

• UK SPV: A UK-incorporated subsidiary acts as the production company, hiring UK crew and using UK facilities.
• Service company model: A UK service company produces the content on behalf of an international commissioning entity; careful structuring is needed to ensure the UK company is the qualifying production company.
• Sale and leaseback: Less common since AVEC, but some hybrid structures still exist.

Transfer pricing rules and the general anti-avoidance provisions apply, so bespoke tax advice is essential for international structures.

The Bottom Line

The Audio-Visual Expenditure Credit gives high-end television productions a 34% credit and animation productions a 39% credit on qualifying UK core expenditure. With the credit now above-the-line and payable as cash when it exceeds the tax liability, AVEC is one of the most compelling reasons to base major productions in the UK. Studios must pass the BFI Cultural Test, maintain meticulous UK expenditure records, and file through the CT600K. Early engagement with the BFI and specialist media tax advisers will ensure the claim process runs smoothly and the maximum credit is recovered.