Animation Tax Relief in the UK

There is no cap on the amount of tax relief which can be claimed.

All reliefs are capped by EU State Aid regulation at 80% of total production budget.

An Animation Production Company (APC) can claim a tax relief of up to 25% of qualifying expenditure for qualifying animation programmes.

The project must be an animated programme, although it may be mixed content. To qualify as an animation programme, at least 51% of the core expenditure on the completed programme must be on animation production expenditure.

To qualify for animation programme tax relief, projects must:

  • Have a minimum 10% of core expenditure spent in the UK
  • Be intended for broadcast (including internet broadcast)
  • Have one APC registered as a UK Limited Company with Companies House and set up before animation shooting begins
  • The APC must be responsible for all the animation programme making activity from pre-production through to completion
  • Must qualify as British via the Cultural Test or be an official co-production

How an animation project can qualify as British

An animation programme can qualify as British by passing the cultural test, or as an official co-production.

The UK has 10 bi-lateral co-production treaties and is also a signatory to the European Convention. Some of the bi-lateral treaties allow television co-production.

The cultural test for animation programmes is a points-based test where the project needs 16 of a possible 31 points to pass. It comprises four sections:

Section A – Cultural content
A1Set in the UK or an EEA state or (Up to 3 points will be awarded for set in an undetermined location)Up to 4 Points
A2Lead characters British or EEA citizens or residents (or characters from an undetermined location)Up to 4 Points
A3Animation based on British subject matter or relates to an EEA state or underlying material4 points
A4Original dialogue recorded mainly in English languageUp to 4 Points

Section B – Cultural contribution
BProgramme represents/reflects British creativity, British heritage or diversityUp to 4 Points

Section C – Cultural hubs
C1At least 50% of the animation shooting or visual design or layout &storyboarding or VFX takes place in the UK2 points
C2At least 50% of the music recording or audio post-production or picture-post production or voice recording takes place in the UK1 point

Section D – Cultural practitioners
D11 of the 3 lead directors is an EEA citizen or resident1 point
D21 of the 3 lead scriptwriters is an EEA citizen or resident1 point
D31 of the 3 lead producers is an EEA citizen or resident1 point
D41 of the 3 lead composers is an EEA citizen or resident1 point
D51 of the 3 lead actors/voiceover artists is an EEA citizen or resident1 point
D6At least 50% of the cast are EEA or residents1 point
D7At least 1 of the 7 key HoDs is an EEA citizen or resident1 point
D8At least 50% of the crew are EEA citizens or residents1 point
Total 31 points

The cultural test is adminstered by the BFI’s Certification Unit who manage the application process as well as giving useful advise to productions on how to pass the test.

Applicants can apply for interim certification at any point before or during production. Interim certification is essential if you wish to claim animation tax relief during production.

A final application must be submitted once the programme is complete and ready to be broadcast to the general public.