How to Apply for AVEC: A Practical Guide for Small Businesses and Production Companies
You’ve got a project budget, supplier invoices coming in, and a Corporation Tax deadline sitting in the background. Then AVEC comes up — the Audio-Visual Expenditure Credit — and suddenly you’re trying to work out whether your company can claim, what counts as qualifying spend, and where the process even starts.
If that sounds familiar, you’re not missing something obvious. AVEC can be valuable, but only if you deal with the practical steps properly — company structure, BFI certification, cost tracking and the Corporation Tax filing itself.
This guide walks you through how to apply for AVEC in a general, practical way. It’s aimed at small businesses and production companies that want to understand the process, avoid common mistakes and know where to go for reliable help.
This article reflects the AVEC rules and HMRC guidance available in August 2026. Eligibility will always depend on the facts of the production, the company structure and the underlying expenditure.
Understanding what AVEC is
AVEC is the UK’s expenditure credit system for certain qualifying film and television productions. It replaced the older creative industry tax relief regime for new claims in these categories.
The credit is based on qualifying core production expenditure — in plain English, the costs of making the production from pre-production through to post-production and delivery.
It also works differently from a simple tax deduction. AVEC is a taxable expenditure credit, which means it is brought into the tax calculation in a specific way and can be used against Corporation Tax and certain other liabilities. If there is an amount left after the relevant set-off steps, part of it may become payable.
Why does that matter? Because for many small businesses and production companies, AVEC can improve cash flow on a project that has already involved significant upfront spending.
Checking whether your production is eligible
Before you think about the claim form, check the basics. A surprising number of problems start here.
Your production will generally need to:
Be made by a UK company within the Corporation Tax regime.
Be produced by the company that is actually responsible for planning, decision-making and production activity.
Have that company directly negotiating, contracting and paying for the relevant goods and services.
Be certified as British by the British Film Institute (BFI), either through the cultural test or an official co-production route.
Have at least 10% of its core expenditure relating to activities in the UK.
Meet the detailed format and audience conditions for the relevant category.
The main qualifying categories include:
Film.
High-end TV drama, comedy and documentary.
Animation.
Children’s television.
Some categories come with extra tests. High-end TV has minimum average core expenditure per hour and minimum slot-length conditions. Animation generally needs at least 51% of core expenditure to be on animation production activity. Film must be intended for theatrical release. Television productions must be intended for broadcast to the general public, including streaming.
A useful question to ask early is this: does the company claiming AVEC genuinely look like the production company, or does it just sit in the middle of the paperwork? If the structure is weak, the claim can be weak too.
Structuring the production company and accounting setup
Start with the company before production spending builds up.
In many cases, the claimant will be a dedicated UK limited company set up for a specific production. Whatever structure you use, the key point is that the claimant company should be responsible for the whole production journey:
Pre-production.
Principal photography or animation production.
Post-production.
Delivery of the completed production.
It should also be making real production decisions. If another business is controlling the project while your company simply receives and pays invoices, HMRC may question whether your company is the correct claimant.
At the same time, build an accounting structure that lets you separate costs clearly. You should be able to identify:
Total project costs.
Core production costs.
UK core expenditure.
Non-UK expenditure.
Development costs.
Distribution and marketing costs.
Overheads and general business costs.
Connected-party transactions.
This matters because AVEC is not based on every pound in the budget. Some costs sit outside qualifying core expenditure entirely.
Practical steps help here:
Create project-specific cost codes from day one.
Use separate nominal codes for core and non-core costs.
Tag invoices by production, supplier, location and cost type.
Reconcile payroll, contractor costs and purchase invoices regularly.
Review the coding before the year end rather than after it.
If you leave this until the Corporation Tax return is due, you’re usually reconstructing the claim from a pile of invoices and half-remembered decisions. That’s when mistakes creep in.
Passing the BFI cultural test
Your production must be certified as British before you can claim AVEC. For many applicants, that means dealing with the BFI cultural test.
For film, the test is points-based. You need at least 18 out of 35 points across four areas:
Cultural content — story, setting, characters and language.
Cultural contribution — contribution to British or European cultural life.
Cultural hubs — use of UK studios, locations and facilities.
Cultural practitioners — UK or European writers, directors, producers, cast and crew.
Equivalent tests apply for high-end TV, animation and children’s television.
The practical point is this: don’t wait until the end to guess your score. Review the criteria early and gather evidence as the production develops.
Your score may be affected by factors such as:
Where the story is set.
Whether the script reflects British or European culture.
Where filming, animation or post-production takes place.
The nationality or residence of key cast and crew.
The use of UK production facilities.
The BFI cultural test for film explains the points in detail, and the BFI provides category-specific guidance for other productions too.
You may need to provide evidence such as:
The script, treatment or synopsis.
The shooting schedule.
A budget or final cost report.
Cast and crew details.
Production locations.
A statutory declaration.
An auditor’s report in some cases.
A viewing link for the completed production when applying for final certification.
You can apply for an interim certificate before or during production, which can be useful if you need to submit a claim before completion. Once the production is finished, you must apply for a final certificate.
A common mistake? Treating certification as a box-ticking exercise at the end. If documents are incomplete, key personnel details are missing, or the production has changed from the original application, that delay can hold up the tax claim.
Tracking qualifying expenditure properly
This is the part that usually determines whether the claim process feels manageable or painful.
AVEC uses the lower of:
80% of total core expenditure; or
the actual UK core expenditure.
So no — the claim is not automatically based on 80% of the whole budget. You need to identify both total core expenditure and the amount that qualifies as UK expenditure under the rules.
Core expenditure generally covers costs relating to:
Pre-production.
Principal photography.
Animation production.
Post-production.
Delivery of the completed production.
Examples may include crew costs, facilities, equipment hire, studios, set materials and post-production services, provided they fall within the detailed rules.
When reviewing spend, focus on where goods or services were used or consumed. That is often more important than where the supplier is based.
For each invoice or cost line, ask:
What was bought?
Which production does it relate to?
Is it a core production cost?
Was it used or consumed in the UK?
Is any part of the supplier relationship connected-party?
What evidence supports the treatment?
Keep clear supporting records, including:
Invoices.
Contracts.
Payroll reports.
Freelancer agreements.
Facility bookings.
Purchase orders.
Payment evidence.
Internal cost reports.
If your records only show totals without explanation, you may struggle to support the figures later. Good documentation is what turns a rough estimate into a defensible claim.
Submitting the claim through the Corporation Tax return
You claim AVEC through the company’s Corporation Tax return, not through a separate stand-alone claim portal.
For returns submitted on or after 6 April 2026, HMRC requires the CT600P Creative Industries supplementary page to be included with the Company Tax Return.
For each relevant accounting period, you’ll need to calculate the credit and include supporting details for each production, such as:
The BFI British certification number.
The split between UK and non-UK core expenditure.
A breakdown of qualifying costs by category.
Details of connected-party transactions.
The calculation showing how the 80% cap has been applied.
How the credit is being treated in the Corporation Tax computation.
A practical filing checklist can help:
Confirm the accounting period being claimed.
Check that the BFI certificate details match the production exactly.
Reconcile the tax computation to the underlying production cost report.
Make sure the CT600P is completed fully.
Review whether your filing software supports the supplementary pages and disclosures.
Keep a saved copy of the final figures and working papers.
This last point matters more than many businesses expect. Not every bookkeeping or accounts package is built to handle specialist Corporation Tax claim schedules. You may need separate Corporation Tax software, support from your accountant, or guidance from the software provider’s help centre.
HMRC’s AVEC guidance covers the current filing requirements, rates and supporting information.
Claims can generally be made, amended or withdrawn up to two years after the end of the accounting period to which the claim relates. But leaving it late is risky — especially if certification is unfinished, records are incomplete or costs still need recoding.
Understanding the AVEC rates
The rate depends on the category of production:
34% for standard qualifying films and high-end TV programmes.
39% for qualifying children’s TV, animated films and animated TV programmes.
53% for qualifying independent films under the Independent Film Tax Credit (IFTC).
The independent film rate has extra conditions. Broadly, principal photography must have begun on or after 1 April 2024, total core expenditure must not exceed £23.5 million, and the production must meet the relevant creative connection requirement. The enhanced rate is available on up to £15 million of qualifying core expenditure.
There may also be an additional VFX credit for some standard-rate film and high-end TV productions, but it has its own rules. It should be reviewed separately, not assumed.
If you want a starting point, HMRC’s creative industries expenditure credit calculator can help sense-check the numbers. It’s useful for orientation — but it doesn’t replace a proper review of the legislation and guidance.
Watching out for common AVEC pitfalls
Some issues come up again and again — and they usually have nothing to do with bad intentions. They come from rushed coding, unclear records or assumptions that were never checked.
Misclassifying costs
Not every production-related cost is qualifying core expenditure. Development, distribution, marketing, financing costs and general overheads may need separate treatment.
Mixing projects together
If your business is handling multiple productions, cost separation is essential. If the bookkeeping blurs one project into another, the claim becomes harder to support.
Assuming every UK supplier invoice is UK expenditure
It isn’t. HMRC looks at where the goods or services were used or consumed, not simply where the supplier is registered.
Leaving BFI certification too late
An interim certificate can help during production, but final certification still matters. If the BFI process slips, the tax claim may slip with it.
Missing deadlines
Claims are time-limited. If you miss the Corporation Tax filing window or the amendment deadline, the opportunity may be lost.
Incomplete documentation
If you can’t link a figure in the claim back to an invoice, contract, payroll report or production record, you may have a problem if HMRC asks questions.
Overlooking connected-party transactions
Payments involving directors, shareholders or linked businesses often need extra care and clear records.
Learning more and getting support
If you want to understand AVEC in more detail, start with the primary sources and then build from there.
Useful places to look include:
HMRC’s official AVEC guidance.
The BFI’s British certification and cultural test guidance.
Your Corporation Tax software provider’s help centre, especially for CT600P filing support.
An accountant who understands production company claims and can review the numbers before submission.
Sometimes the best next step is simply getting a second pair of eyes on the structure and cost categories before the return is filed. That can save a lot of time later.
Getting your AVEC claim ready
AVEC can be a valuable form of support for an eligible production company — but only if the groundwork is right.
Check eligibility early. Make sure the claimant company is correctly structured. Work through the BFI cultural test in good time. Track qualifying spend carefully, with evidence behind it. Then submit the claim through the Corporation Tax return with the right supplementary pages and supporting information.
If you want help reviewing eligibility, cleaning up production records or preparing the Corporation Tax side of an AVEC claim, we can help. At Creative and Numbers, we support UK small businesses and production companies with bookkeeping, tax and practical accounting systems that make complex claims easier to manage.
Get in touch if you’d like support with your AVEC claim.
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