The UK’s VFX sector received a boost in October 2024, when the autumn budget confirmed increased tax relief for visual effects in film and high-end TV. UK VFX costs now receive a 5% increase in tax relief, for an overall net rate of 29.25%, and are exempt from the overall 80% cap on spending eligible for the main Audio Visual Expenditure Credit (AVEC). Figures from the UK Screen Alliance, the membership organisation representing the interests of the UK facilities sector, including VFX and post, forecast the UK is set to attract an additional £175m per year of spending on VFX for film and TV.
The uplift comes after a government consultation into the existing AVEC and how it pertained to VFX and post-production spend. The UK’s VFX specialists, supporting by organisations including the British Film Commission (BFC) and UK Screen Alliance, along with US studios and streamers were all involved. “They all fed into this consultation and the ask from government,” notes Gareth Kirkman, the BFC’s UK business and industry development manager, of the latter.
The UK’s VFX sector is already booming, and the largest international VFX companies are based here. Indeed, anyone wanting to know the strength of the UK’s visual effects output need only look at the Academy Awards; in 11 of the last 14 years, a UK-based VFX company has won an Oscar for its work.
“We have the capacity to cope with very large series and multiple feature films going on in the UK at the same time,” says Neil Hatton, chief executive of UK Screen Alliance. “We offer a lot of positive non-financial advantages — not least that we are damn good at it.”
“We do have the best and most creatively talented people here,” agrees Kirkman.
Nevertheless, the 80% budget cap on qualifying costs for the AVEC, formerly known as the UK film tax relief, meant US majors shooting their films in the UK were sometimes forced to go elsewhere to do their post-production.
UK companies also reacted by investing overseas themselves so they could still provide post-production services for their clients, albeit through international offshoots.
‘[The US studios] would say ‘we need to place the work in another country. If you can do that, great. If you can’t then we’ll take the work somewhere else,” recalls William Sargent chairman and co-founder of Framestore, the VFX house which has recently had a hand in box office hits Wicked, Paddington In Peru and Gladiator II. He cites the example of 2023’s biggest box office hit Barbie which shot in the UK but, because of the 80% cap, Framestore ended up doing the VFX in Montreal.
“We invest a lot into the UK. It’s our second biggest hub outside of the US but every studio is always looking for the best opportunities for the budget, more money on screen and the 80% cap was sometimes a barrier,” says Kris Wright, director of VFX for Netflix in the UK, who is working on projects such as the Peaky Blinders movie, a new series of The Gentleman and Greta Gerwig’s reboot of The Chronicles Of Narnia.
Changing the game
The VFX uplift is “a brilliant win and it’s also an obvious win,” says Kirkman, who notes there has already been an uptick in business. “It makes perfect sense to keep that investment in the UK.”
“For big productions, it was either shooting in the UK or VFX in the UK but very rarely both,” notes Hatton. “Now you can have both, and you can be incentivised for both.”
And the studios and streamers are already feeling the benefit. “It has allowed for better planning,” Wright says. “It changes the calculus.”
Sargent notes the new measures will enable to sector to build more efficiently for the future. There is now, he says, “certainty and clarity”, and this will reassure the US studios as they make decisions about where to take their VFX work.
This potential for growth, he says, is more organic and sustainable from the post-pandemic production boom of 2022. “What you want is solid growth that allows you to react in time.”
Smaller VFX outfits, many of them based across the UK’s nations and regions, are also expected to benefit from the enhanced UK Independent Film Tax Credit within AVEC, worth 40% to films costing up to £15m. That’s because lower and mid-scale budgeted projects now have the financial incentive and justification to utilise UK services, meaning potential new revenue streams for UK businesses.
“We have fantastic independent [VFX] facilities in all our production hubs, like Bristol, Manchester, Liverpool, Yorkshire, Cardiff, Glasgow and Belfast, and with the enhancement, those facilities get more opportunity as well,” says Kirkman, who predicts that many projects will look to do their VFX with vendors that might be new to them. “More potential spend in the UK means more opportunity for a wider range of facilities.”
And that, says Sargent, is good for the sector as a whole. “We are incredibly competitive with each other, competition generates good quality work,” he says, noting that the UK’s VFX companies have a “dialogue” with each other, and strive to make “a very good relationship with officials and governments of all colours.”
“The UK has a very diverse spectrum of visual effects companies, from very small boutiques with 25 people to the Oscar winning companies,” Wright agrees. “We are very spoiled for choice for the amount of talent and types of companies that are here.”
