A Producer’s Guide: How to Unlock UK Animation Tax Credits Through Co-Production

Last updated: October 2025

Introduction: Your Guide to Getting Your Animation Financed in the UK

The UK animation Audio-Visual Expenditure Credit (AVEC) offers a payable cash credit on qualifying UK expenditure for culturally British animated productions, and it can be accessed by international and independent producers through a UK co-production structure.

Getting a feature film or series financed is the hardest part of a producer’s job. But what if there was a way to unlock a net benefit of around 29.25% of your qualifying UK core budget in the form of a cash rebate? The UK animation AVEC (the UK’s animation tax credit) makes this possible.

This isn’t a dry legal handbook, it’s a practice playbook based on our first-hand experience guiding productions through this exact process. We’ll break down what the scheme is, how to qualify, and how a co-production with a UK partner like A+C can transform your financial model.

Animation is a high-cost medium, but with the right strategy, you can reduce the risk and unlock funding that puts your creative vision within reach.

Read on to learn how a UK co-production can help get your project financed.

What is the UK Animation Audio-Visual Expenditure Credit (AVEC)? (A Simple Explanation)

At its core, the UK’s animation Audio-Visual Expenditure Credit (AVEC) is a government incentive designed to encourage animated film and television production in the UK. For expenditure incurred from 1 January 2024, the scheme Animation Tax Relief is being phased into the Audio-Visual Expenditure Credit (AVEC), which replaces the previous Animation Tax Relief regime.

Here’s what that means in real terms:

• Headline AVEC credit rate: 39% of qualifying UK core expenditure (on up to 80% of your total core costs)
• Net value (after tax): approx. 29.25% of your qualifying UK core expenditure, payable as a cash credit (assuming the main 25% UK corporation tax rate)

Under AVEC, “qualifying UK expenditure” normally means the lower of 80% of your total core production costs and your actual UK core costs.

In practise, this means that if you spend £1,000,000 in the UK on qualifying animation costs, you could receive around £292,500 back.

It applies to projects:

• Intended for broadcast or theatrical release

• That meet a minimum 10% UK expenditure requirement

• For animation AVEC, where at least 51% of total core expenditure relates to animation

• That pass the BFI cultural test or qualify as an official co-production

In other words, it’s not just an accountant’s exercise; it’s a powerful financing tool designed with producers in mind.

Disclaimer: Always consult a financial professional. You can also read the full details on GOV.UK

Producer’s Note

While the headline rate is 39%, it’s the 29.25% net figure that you should use for your financial modelling. This is the real cash benefit your production can expect after tax liabilities are accounted for.

The Path of Qualification: A 3-Step Guide for Producers

Here’s how to actually unlock the UK Animation Tax Relief.

Step 1: The Co-Production Structure (Your UK Partner)

To qualify, the project must be run by a UK production company. For an international producer, this usually means setting up a Special Purpose Vehicle (SPV) with a UK partner

That’s where A+C comes in. We don’t just provide the creative’ we also act as your UK production partner, handling compliance, budgeting, and the infrastructure needed to access the relief.

Step 2: Passing the BFI Cultural Test

The BFI cultural test is how the UK decides whether a production can be certified as “British.” It’s a points-based system: for animation television programmes you need to score at least 16 out of 31 points, while animated features and high-end TV use the film/HETV test with 18 out of 35 points.

Key questions to ask yourself:

• Is your set in the UK (wholly or partly)>
• Do your lead characters have British nationality or residence?
• Is a significant proportion of the animation work being done in the UK?
• Are you hiring UK talent in senior creative or production roles?

Even if your story isn’t inherently British, animation often passes through points earned in pre-production, production, and post. For example, working with A+C’s UK-based artists and facilities can tip the balance in your favour.

“The cultural test can seem subjective,” notes Ollie Perrin, Senior Producer at A+C. “But with the right strategy, it’s very achievable. We work with our partners early in development to ensure the project is structured to easily secure the necessary points without compromising the creative vision.”

Step 3: Meeting the Minimum UK Spend

At least 10% of core expenditure must take place in the UK. This is usually the easiest requirement to meet, especially with a partner like A+C. By tapping into our 5,000 sq ft production stage, experienced crew, and full in-house pipeline, international producers can confidently meet (and exceed) the UK spend threshold.

With these three steps, SPV setup, cultural test strategy, and UK expenditure, your project is well on its way to unlocking rebate.

The Financial Impact: A Hypothetical Budget Example

Let’s look at a simplified example for a 22-minute animated special.

This isn’t just a tax perk; it’s a cornerstone of your financing model. Crucially, this is a direct cash payment to your production company, not just a tax deduction, which dramatically improves cash flow during production. Imagine plugging a near 30% return into your budget plan. Suddenly, co-production with a UK partner isn’t just a logistical requirement’ it’s a financial strategy.

As one producer recently put it: “Seeing the numbers on paper is the moment we realised this was possible. The tax credit didn’t just close our gap, it made the project viable.”

Conclusion: Your Experienced Partner in UK Production

Navigating the world of film finance can be complex, but you don’t have to do it alone. The UK’s Animation Tax Relief is one of the most generous incentives in the world, and with  the right partner, it’s well withing your reach.

At A+C, we’re more than just animators, we’re co-producers, facilitators, and strategists who know how to turn financial frameworks into real, greenlit projects.

Your initial consultation is a no-obligation call with our production team to assess your project’s potential eligibility and outline a possible co-production structure. Let’s get your project financed.

Schedule a Co-Production Consultation

Written by Dan Richards, Founder & Animation Director, A+C Studios.