HMRC’s latest creative industries statistics show that UK film, television and video games tax incentives remain a significant driver of investment and production activity, with total creative sector support rising to £2.45 billion in the year ended 31 March 2025 (2024/25). Crucially, these are the first statistics published since the introduction of the reformed Creative Industry Tax Reliefs, including AVEC, IFTC and VGEC.
Film-related incentives increased by 39% compared with the previous year, while High-End Television (HETV) support fell by approximately 10%. Video games also recorded one of their strongest year-on-year increases since the pandemic.
However, the headline figures highlight an important shift. A growing proportion of the tax credits paid by HMRC is flowing to larger film, television and video game productions, rather than being spread across lower-budget projects.
So, what is driving these trends?
Film appears to be benefiting from renewed production activity
The 21% increase in the number of film claims appears to reflect a combination of recovering production pipelines and the introduction of enhanced support for qualifying independent films. However, at least for now, the 39% increase in tax relief paid appears to have been driven largely by higher-budget productions.
Looking ahead, several recent independent films have demonstrated that modest production budgets are not necessarily a barrier to commercial success. Obsession and Backrooms significantly outperformed industry expectations, generating box office returns that rivalled many significantly higher-budget productions and delivering strong returns relative to production cost.
Whilst it is too early to determine whether this will translate into increased activity at this production level, these successes highlight the growing commercial viability of lower-budget filmmaking. Combined with the enhanced support available through the Independent Film Tax Credit (IFTC), which offers a headline tax credit rate of 53% on qualifying expenditure, the UK independent film sector remains well positioned to attract future investment.
High-end television faces a different set of challenges
High-end television programmes, which average more than £1 million of production costs per hour of runtime, remain the largest single category in receipt of support. However, HMRC reported a reduction in the value of claims compared with the previous year.
Notably, 49% of HETV claims were for £250,000 or less. However, these accounted for only 3% of the total value of tax credits paid.
It was widely reported that traditional UK broadcasters reduced spending on large-budget television productions during 2024/25 as commercial pressures continued to mount, a trend that remains evident today. In contrast, there has been an uplift in culturally British productions being commissioned by global streaming platforms like Netflix and Amazon Prime, which account for a substantial proportion of the associated tax incentives paid out.
Video games continue their upward trajectory
Video games were another significant contributor to overall sector growth in 2024/25, with HMRC highlighting increases in the value of claims made. For many studios, tax incentives remain a critical source of non-dilutive funding, helping businesses manage risk while continuing to invest in talent, technology and intellectual property.
The growth in claims during 2024/25 was largely driven by an increase in mid- and high-value claims, which broadly corresponds to annual development budgets of between £400,000 and £10 million.
The transition from Video Games Tax Relief (VGTR) to the new Video Games Expenditure Credit (VGEC) has also influenced claiming behaviour. Compared with VGTR, several notable changes should be known by claimants, including:
- The removal of the restriction to qualifying European expenditure.
- The removal of the £1 million cap on qualifying subcontracted costs.
- A reduction in the minimum qualifying expenditure threshold from 25% incurred in the UK or EEA to 10% used and consumed in the UK.
In particular, the European expenditure restriction means some developers have resisted claiming under VGEC for existing developments. However, with the withdrawal of the VGTR scheme on 1 April 2027, a transition to VGEC will be necessary after this date, while others may benefit from transitioning to VGEC sooner.
Key takeaways
The latest figures reinforce the importance of creative industry tax incentives at a time when businesses continue to face rising production and development costs, alongside fierce international competition for investment.
While film, television and video games are experiencing different market conditions, the common theme is clear: tax incentives remain a key factor in attracting investment and supporting production activity in the UK.
As AVEC and VGEC continue to replace the legacy relief regimes ahead of full transition in April 2027, businesses should ensure they understand how the new rules apply and whether changes to their claim methodology could unlock additional benefits.
