How the UK’s 2025 Tax Changes Impact Media and Tech Companies

2025 ended with a clear message from government policy. As per the 2025 tax changes, the government wants more production, more innovation, and cleaner reporting. Media and tech firms sit right in the middle of that plan.

Some changes went into effect already in 2025. Others were confirmed through Autumn Budget 2025 documents and ongoing consultations. For business owners, the practical question is simple: 

1. What can you claim?
2. What must you prove, and 
3. What needs tighter systems before 2026?

Apex Accountants work with production companies, studios, agencies, software firms, digital platforms, and game developers. Here is what mattered most through 2025.

1) Media tax relief moved into expenditure credits

The biggest structural tax changes for media companies have been the shift to expenditure credits, with HMRC providing clear guidance.

Audio-Visual Expenditure Credit (AVEC)

For qualifying films and TV programmes, HMRC confirms a 34% rate and a separate treatment for visual effects costs. 

Key points businesses need to build into budgets and claims:

• AVEC is taxed at the main rate of Corporation Tax, then used against the Corporation Tax liability.
• From 1 April 2025, productions within the 34% category can claim an additional credit for qualifying visual effects costs.
• VFX costs can qualify at 39% and are exempt from the 80% cap on total core costs.
• HMRC notes costs incurred from 1 January 2025 can be eligible for this VFX treatment

Tax changes for media companies on the ground in 2025:

Credits improved certainty for many productions. However, evidence requirements became more important. Cost classification, supplier contracts, and workpapers now carry more weight in risk reviews.

2) Video games moved into a credit regime with a transition window

Video game studios had their own major change. HMRC guidance confirms the Video Games Expenditure Credit (VGEC) can be claimed on qualifying expenditure incurred from 1 January 2024.

What should you take from these tax changes for tech companies:

• Production start dates matter for transitional choices
• Documentation around qualifying spend matters more than ever
• Long projects need early planning, not a year-end scramble

3) R&D relief: merged scheme rules became central through 2025

For tech firms, R&D remains one of the most important relief areas. HMRC guidance on the merged R&D scheme sets a clear headline point: the R&D expenditure credit rate is 20% under the merged scheme. 

What this meant for 2025 claims:

• More firms moved onto a single merged framework
• Claims needed cleaner technical narratives
• Cost breakdowns needed stronger links to eligible work

Strong R&D claims still win. Weak claims create delays, enquiries, or disallowances. Systems and evidence win here.

4) Digital taxation: DST remained, with formal review published in Autumn 2025

Large digital groups kept a close eye on the Digital Services Tax (DST). A statutory review was published during the Autumn Budget 2025, examining how the tax has performed, how it is administered, and its wider impact.

For businesses, these tax changes for tech companies pointed to a clear direction of travel:

• DST remained a live issue throughout 2025
• Government focus stayed firmly on how value and profits link to UK activity
• International alignment continued to shape future policy choices

This is not just a “big tech” issue. UK firms providing cross-border digital services often feel the knock-on effects of tax changes through higher platform fees, tighter contract terms, and increased compliance expectations across the supply chain.

What media and tech firms should prioritise going into 2026

These are the actions we advised clients to take during 2025. They remain critical going into 2026, especially with tighter HMRC scrutiny and credit-based reliefs now firmly in place.

1) Lock in tax relief eligibility before spending starts

Do not wait until year-end.

Before a project or development phase begins:

• Confirm which relief applies (AVEC, VGEC, R&D, capital allowances)
• Check the start date rules for eligibility
• Identify which costs will qualify and which will not
• Build relief assumptions into the project budget from day one

If eligibility is unclear at the outset, claims become weaker later.

2) Fix your chart of accounts for relief claims

Generic bookkeeping causes problems.

Your accounting system should:

• Separate qualifying and non-qualifying costs
• Split UK and non-UK expenditure
• Distinguish staff costs, subcontractors, and consumables
• Track costs by project, not just by department

This reduces errors, speeds up claims, and lowers enquiry risk.

3) Build evidence as you go, not after the fact

HMRC expects contemporaneous records.

Throughout the year, retain:

• Signed contracts and statements of work
• Invoices linked clearly to each project
• Time logs or activity records for staff and contractors
• Technical notes explaining what was produced and why

If evidence is created months later, it carries less weight.

4) Review group structure and IP ownership now

Many issues arise here.

Check:

• Which company owns the IP
• Where development or production actually takes place
• How profits are allocated within the group
• Whether royalty and licence agreements reflect reality

Misaligned structures weaken claims and attract HMRC attention.

5) Plan cashflow around claim timing, not just entitlement

Credits are helpful, but timing matters.

You should:

• Forecast when claims can realistically be submitted
• Understand when credits will be received or offset
• Avoid relying on reliefs to plug short-term cash gaps
• Factor in HMRC processing time and possible queries

Strong businesses treat credits as upside, not survival funding.

6) Assign ownership internally

Someone must be responsible.

Make sure there is:

• A named person overseeing tax relief data
• Clear responsibility for record-keeping
• Regular internal reviews before year-end
• Communication between finance, production, and technical teams

Relief fails when everyone assumes someone else is handling it.

How Apex Accountants Can Help You Deal With 2025 Tax Changes

We support media and tech companies with practical, claim-ready delivery:

• AVEC support: qualifying checks, cost reviews, claim preparation, and enquiry defence.
• VGEC support: transition planning, qualifying expenditure review, claim files 
• R&D tax relief: eligibility review, technical write-ups, cost modelling, merged scheme claims.
• Corporation Tax planning for studios, agencies, software firms, and digital platforms
• Systems and reporting clean-up to support digital compliance and HMRC-ready records

FAQs

Does AVEC cover visual effects, or only core production?

HMRC guidance confirms separate treatment for VFX, including a 39% rate and removal from the 80% cap rules.

When can a game studio claim VGEC?

HMRC states VGEC can be claimed on qualifying expenditure incurred from 1 January 2024. 

What is the R&D merged scheme rate?

HMRC guidance sets the merged scheme R&D expenditure credit rate at 20%. 

Is DST still relevant after the Autumn Budget 2025?

A formal DST review was published in Autumn 2025, so it remained active and under evaluation through late 2025.

Conclusion

The 2025 tax agenda did not rewrite the rulebook overnight. Instead, it reshaped how incentives work, moved reliefs into credit-based systems, raised the bar on evidence, and increased expectations around transparency for digital activity.

Media and tech firms that built tax planning into day-to-day operations adapted smoothly. Those that treated it as a year-end exercise faced delays, queries, and avoidable pressure.

As we move into 2026, early tax planning matters more than ever. The right structure, clean records, and timely advice can protect cashflow and strengthen claims.

If you want practical tax support tailored to your media or tech business, contact Apex Accountants today. We help you plan early, claim confidently, and stay compliant—without unnecessary risk.