188体育

Example 2 鈥� Company W

Company W is producing a film which is not an animation or an independent film. It therefore qualifies for additional credit for relevant VFX expenditure. 90% of relevant global expenditure on the film is UK expenditure, meaning the 80% cap applies.

The film is produced across two accounting periods: the year ended 31 March 2026 (AP1) and the year ended 31 March 2027 (AP2). Company W claims AVEC on the film for both periods. The film is completed in AP2.

The expenditure totals on the film are:

Description	AP1 (拢)	AP2 (拢)	Total (拢)
Overall relevant global expenditure	25,000,000	15,000,000	40,000,000
Non-UK expenditure	2,000,000	2,000,000	4,000,000
Relevant VFX expenditure	1,000,000	5,000,000	6,000,000

Non-UK expenditure and relevant VFX expenditure are both part of the overall relevant global expenditure.

Company W claims Chapter 3 AVEC credits for AP1 and AP2 on its relevant global expenditure, including its relevant VFX expenditure. The Chapter 3 credits are calculated using the steps in section 1179CA(1). For AP1, the credit is 拢6,800,000 and for AP2 it is 拢4,080,000.

Because AP2 is the completion period, Company W also claims additional VFX credit for that period. Because it has claimed Chapter 3 credits on the film, Company W first needs to calculate the adjusted VFX portion of those Chapter 3 credits, then use the adjusted VFX portion to find the additional VFX credit.

Calculate adjusted VFX portion

Step 1 鈥� identify UK expenditure in the AVEC period

The AVEC period covers both AP1 and AP2. Therefore, relevant global expenditure in the AVEC period is the 拢40,000,000 total relevant global expenditure across both periods.

The amount of UK expenditure = 拢40,000,000 鈥� 拢4,000,000 non-UK expenditure = 拢36,000,000.

Step 2 鈥� identify how much of the result of step 1 is relevant VFX expenditure

This is the relevant VFX expenditure on the production across both periods: 拢6,000,000.

Step 3 鈥� determine whether the 80% cap applied and, if so, the amount of the reduction made by the cap

AP2 is the most recent accounting period for which Company W claimed a Chapter 3 credit. For AP2, the 80% cap did apply. This is because UK relevant global expenditure to date is more than 80% of total relevant global expenditure to date:

UK relevant global expenditure = 拢40,000,000 鈥� 拢4,000,000 non-UK expenditure = 拢36,000,000

80% of total relevant global expenditure = 拢40,000,000 x 80% = 拢32,000,000

The reduction made by the cap is the difference between the two figures:

拢36,000,000 - 拢32,000,000 = 拢4,000,000

Because the result of this step is positive, Company W skips to step 5.

Step 4 鈥� does not apply

Step 5 鈥� subtract the reduction made by the cap (the result of step 3) from relevant VFX expenditure (the result of step 2)

拢6,000,000 relevant VFX expenditure - 拢4,000,000 cap reduction = 拢2,000,000

Because the result of this step is positive, Company W continues to step 6.

Step 6 鈥� multiply VFX expenditure not excluded by the cap (the result of step 5) by 34%

拢2,000,000 x 0.34 = 拢680,000

The adjusted VFX portion is therefore 拢680,000.

Calculate additional VFX credit

Now that Company W knows the adjusted VFX portion, it can calculate the additional VFX credit. The additional credit for relevant VFX expenditure is:

Description	Amount (拢)	Amount (拢)
拢6,000,000 relevant VFX expenditure x 39%		2,340,000
Minus adjusted VFX portion	(680,000)
Minus additional VFX credit previously claimed	-
Total deductions		(680,000)
Additional VFX credit for AP2		1,660,000

Company W's total AVEC for AP2 is 拢4,080,000 Chapter 3 credit plus 拢1,660,000 additional VFX credit.