Why London Became the World's VFX Capital
Welcome back to The Reel Rate. Episode 1 looked at Nevada — a state with willing studios, willing unions, and $1.8 billion in committed capital that still couldn't get a bill passed three times. This month, we're looking at the opposite story: a single rule change that's actively pulling production spend toward one city, with the studios doing the work confirming it on the record.
The cap that used to limit everyone
To understand why the UK's VFX incentive matters, start with the rule almost every production incentive in the world shares: a cap on total claimable credit, expressed as a percentage of qualifying production spend. The UK's standard credit, AVEC, runs at a 34% gross rate (25.5% net after the UK's notional 25% corporation tax treatment), capped at 80% of total core expenditure — physical production and post-production lumped together in the same pool.
That created a specific problem for VFX-heavy productions. A film with enormous post-production needs was competing against its own physical production spend for the same capped allowance. The more a production leaned on VFX, the more likely it was to bump against its own credit ceiling — the opposite of what you'd want if your policy goal is attracting VFX work specifically.
What changed, and why the mechanism matters more than the rate
Effective April 2025 (for spend incurred from January 1, 2025), the UK added a 5-percentage-point uplift specifically for qualifying VFX expenditure — taking the rate from 34% to 39% gross, or 25.5% to 29.25% net. Layered on top of that, VFX spend was fully exempted from the 80% cap that still governs every other category of production cost.
The rate increase is meaningful but modest — five points. The real change is structural: VFX spend now scales the credit with no ceiling tied to overall budget. A production with a small VFX requirement and one with an enormous, effects-driven post pipeline both get the same 29.25% net rate on 100% of qualifying spend, with no upper limit written into the policy either way.
One timing detail worth knowing if you're modeling cash flow: the enhanced rate is only payable in the completion period. VFX spend claimed on interim claims during production receives the standard rate first, with the uplift applied retroactively once the production is complete and finally certified.
The evidence: this is already changing where work happens, and the people doing the work are saying so
This isn't a policy change still waiting to prove itself. UK Screen Alliance chief executive Neil Hatton's June 2025 survey of VFX companies found 71% reporting an increase in inquiries since the change, with 43% describing that increase as significant. Hatton noted bookings were already extending into the following year, alongside the early signs of a hiring uptick.
The studios doing the actual work are confirming it directly. Sue Lyster, who runs ILM's London studio — fresh off Edgar Wright's The Running Man — put it plainly: "Previously, productions would cap out their budget and ask for the VFX work to be placed outside of the UK. That is no longer an issue." Framestore's Fiona Walkinshaw, the company's CEO of film and episodic, said the studio has "had a lot more shows confirmed as happening in the UK" and is "at full capacity at the moment."
There's a clean before-and-after example in Boat Rocker Studios' Netflix series Geek Girl: the first season shot in the UK but sent its VFX work to Toronto for post. The second season's VFX moved to London-based Milk VFX instead — the exact kind of decision the uncapped uplift was designed to produce.
The production slate backs this up at scale. F1, 28 Years Later: The Bone Temple, How to Train Your Dragon, Jurassic World: Rebirth, Mission: Impossible – The Final Reckoning, and Supergirl all filmed and completed their VFX and post-production work in the UK this year. And the infrastructure is responding to the demand directly — Base FX, a major Asia-based VFX house with studios in Beijing, Kuala Lumpur, and Los Angeles, opened its first European facility in London specifically to capture this work.
The honest caveat
This is still a young policy — effective for just over a year as of this writing — and like every production tax credit, it's paid after spend, audit, and certification, not upfront. The uncapped structure solves a real structural constraint, but it doesn't solve the cash-flow timing question that comes with any post-spend credit. Productions still need to finance the gap between VFX spend and eventual payout, no matter how generous or uncapped the final number turns out to be.
The takeaway
Most incentive competition happens on the headline number: 25% versus 30%, capped versus uncapped, refundable versus not. The UK's VFX move is a reminder that the more important lever is sometimes which spending gets to count, not how generous the rate looks on paper. London didn't win this round by offering the biggest number. It won by removing the one rule that quietly capped every other market's appeal — and the studios moving real productions there are saying exactly that, on the record.
