Navigating the Transition From Film Tax Relief to AVEC and VGEC for Commercial Production Businesses in 2026

The UK’s creative industries are about to face a significant financial change. The Audio-Visual Expenditure Credit (AVEC) and the Video Game Expenditure Credit (VGEC) will replace the long-standing Film Tax Relief starting in April 2026. The introduction of AVEC and VGEC for commercial production businesses will directly affect project financing, cash flow management, and investor relations. Apex Accountants helps production companies adapt to and benefit from the new regime.

AVEC for Commercial Production Companies

The Audio-Visual Expenditure Credit (AVEC) will replace the long-standing Film Tax Relief from April 2026. It applies to film, high-end TV, animation, and children’s TV productions. Unlike the old deduction system, AVEC works as a direct expenditure credit, giving companies a more predictable cash benefit.

AVEC for commercial production companies is particularly relevant where work is commissioned for advertising, branded content, or co-productions that qualify under cultural and creative sector rules. Qualifying expenditure is based on core costs such as production, post-production, and VFX. The credit is calculated at a fixed percentage of these costs, improving transparency for producers and investors.

This means productions can forecast cash inflows with greater certainty, making AVEC a valuable tool in securing finance and maintaining cash flow during demanding projects.

VGEC for Commercial Production Companies

The Video Game Expenditure Credit (VGEC) is designed to replace the Video Games Tax Relief and will also begin in April 2026. It supports companies producing games that pass the cultural test set by the British Film Institute. VGEC applies to both UK-based games and international collaborations that meet qualifying criteria.

VGEC creates opportunities for commercial production companies involved in branded interactive content or partnerships with gaming studios to claim credits on qualifying development expenditure. This includes design, programming, and testing costs linked directly to eligible projects.

The credit system presents a straightforward cash benefit rather than a tax deduction, which improves cash flow for companies during lengthy development cycles. This helps businesses take on larger-scale interactive projects and remain competitive in an expanding digital media market.

Why the tax scheme changes for UK creative industry matters

The introduction of AVEC and VGEC is part of the government’s plan to modernise how the UK supports the screen and gaming industries. Film tax relief has served the industry for many years, but the government recognises that a credit-based system offers clearer, more predictable benefits.

For production companies, this means moving from a model that reduced taxable profits to one where a credit is paid against qualifying expenditure. The shift will have a direct impact on cash flow planning and the timing of project funding. Those who adapt early will gain an advantage, while those who delay risk financial strain.

Key features of AVEC and VGEC For Commercial Production Businesses 

The credits have been designed with transparency and competitiveness in mind. Some of the main features include:

• Credit-based structure – qualifying companies receive a payable credit instead of a tax deduction.
• Expanded eligibility – both UK productions and international co-productions may qualify if cultural criteria are satisfied.
• Greater transparency – detailed records linking invoices, payroll, and contracts to projects will be essential.
• Improved predictability – production companies will have more certainty over the level of support available.
• Stronger international position – the new credits make the UK more attractive to global investors.
  

Implications for commercial production companies

The impact of tax scheme changes for the UK creative industry will be felt across multiple areas of financial management.

Budget planning will need to change, as the timing of credits differs from the previous reliefs. Production managers need to consider the timing of credit claims and their impact on payments to crews, suppliers, and other partners.

Tax structuring also becomes more important. Costs must be separated between qualifying and non-qualifying expenditure to avoid errors and delays. This requires reliable accounting systems and accurate project-level data capture.

For investors, the new system may be positive. Clearer forecasts and predictable credits can help secure financing for future projects. At the same time, compliance standards are rising. HMRC will expect strong evidence of every cost, which means more detailed record-keeping than before.

How Apex Accountants helped a production client

One of our commercial production clients was concerned about how the move to AVEC would affect their projects already in development. Their budgets were built around Film Tax Relief, and they faced the risk of shortfalls.

We carried out a full financial review and restructured their budgets to reflect AVEC rules. We also implemented new bookkeeping processes that allowed all costs to be tagged to projects in real time.

The results were immediate:

• They secured a £450,000 credit on a major advertising campaign.
• Their cash flow remained stable despite the policy shift.
• Investor confidence grew due to transparent and accurate forecasting.

By acting early, they avoided disruption and positioned themselves ahead of competitors still adapting to the new system.

Preparing for April 2026 Tax Scheme Changes in UK

Production companies should not wait until the last minute to make changes. Preparing now will reduce risks and allow projects to run smoothly under the new credit system. Key steps include:

• Reviewing upcoming projects to confirm which will qualify under AVEC or VGEC.
• Updating budgets and forecasts to reflect the timing of credit payments.
• Adapting accounting systems to capture and separate qualifying costs.
• Training finance teams to comply with the stricter evidence requirements.
• Seeking early advice to avoid delays in making claims.
  

Why choose Apex Accountants

At Apex Accountants, we specialise in supporting the creative industry. We understand the challenges production companies face and provide tailored services that go beyond compliance. Our work includes:

• Forecasting credits so production teams can plan with confidence.
• Managing AVEC and VGEC claims from start to finish.
• Aligning financial planning with investor reporting.
• Offering fractional and virtual CFO support to strengthen leadership.

We combine technical tax expertise with deep knowledge of the production sector. This makes us a trusted partner for companies looking to secure stability and growth during the transition.

The transition from Film Tax Relief to AVEC and VGEC is fast approaching. Preparing now will help your production company avoid disruption and make the most of the new credits. At Apex Accountants, we provide expert guidance tailored to commercial production companies in the UK.

Whether you need support with forecasting, structuring claims, or managing investor reporting, our specialist team is ready to help.

Get in touch with Apex Accountants today to discuss your projects and find out how we can support your business through this change.