Corporate Interest Restriction: creative reliefs and tax-EBITDA calculation
Published 28 October 2026
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Who is likely to be affected
Large businesses within the charge to Corporation Tax (CT) with net interest and other financing costs (within the scope of CT) exceeding £2 million per annum.
General description of the measure
This measure makes technical amendments to Corporate Interest Restriction (CIR) legislation. In particular, it amends the calculation of taxable earnings (tax-EBITDA) so that amounts of Audio-Visual Expenditure Credits (AVEC) and Video Games Expenditure Credits (VGEC) are excluded from the calculation.
Policy objective
This measure makes technical amendments to CIR legislation to make sure that the regime works as intended.
Background to the measure
Finance Act 2024 (FA 2024) introduced AVEC and VGEC as new expenditure credit regimes for qualifying film, television and video games production, replacing the previous tax relief regimes following a transitional period. The new reliefs follow the same approach as the Research and Development Expenditure Credits (RDEC).
As part of HMRC’s engagement with stakeholders, it has been identified that CIR legislation was not updated to reflect these FA 2024 reforms. As a result, AVEC and VGEC are currently included within tax-EBITDA and allow affected groups to deduct more interest than intended.
This measure was announced at Budget 2026.
Detailed proposal
Operative date
The amendment to exclude amounts of AVEC and VGEC from the calculation of tax-EBITDA applies from 1 January 2027.
Current law
The CIR rules are in Part 10 of Taxation (International and Other Provisions) Act 2010 (TIOPA 2010). For CIR purposes, tax-EBITDA is defined in section 407 of TIOPA 2010.
The rules for AVEC and VGEC are contained in Part 14A Corporation Tax Act 2009 (CTA 2009). The previous rules for film, TV and video games tax reliefs are contained in Parts 15, 15A and 15B of CTA 2009.
Proposed revisions
Legislation is being introduced in Finance Bill 2026-27 to amend the calculation of tax-EBITDA in section 407 TIOPA 2010.
In particular, the calculation of tax-EBITDA will be amended to exclude AVEC and VGEC.
In addition, the references to previous film, TV and video games tax reliefs will be removed.
Summary of impacts
Exchequer impact (£million)
| 2026 to 2027 | 2027 to 2028 | 2028 to 2029 | 2029 to 2030 | 2030 to 2031 | 2031 to 2032 |
|---|---|---|---|---|---|
| negligible | negligible | negligible | negligible | negligible | negligible |
This measure is expected to have a negligible impact on the Exchequer.
Economic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
There is no impact on individuals as this measure only affects businesses.
Equalities impacts
This measure does not affect individuals, therefore it is not anticipated that there will be disproportionate impacts on any protected groups.
Administrative impact on business including civil society organisations
This measure will have a negligible impact on businesses which are subject to CIR and which claim AVEC or VGEC. There are around 1,000 groups expected to claim AVEC or VGEC, although the interaction with CIR will only be relevant for some of these.
One-off costs could include familiarisation with the change, upskilling staff on the change and updating software. Ongoing costs may include adjusting for these items in affected interest restriction returns. This measure is not expected to impact civil society organisations as it only affects large businesses.
This measure is expected to have no impact on businesses’ experience of dealing with HMRC as the change is technical.
Operational impact (£million) (HMRC or other)
HM Revenue and Customs will not incur any additional costs implementing this change.
Other impacts
Other impacts have been considered, and none have been identified.
Monitoring and evaluation
Consideration will be given to monitoring this measure through information collected from affected taxpayer returns and kept under review through regular communication with external stakeholders.
Further advice
If you have any questions about this change, contact Richard Daniel in the Financial Products and Services Team (BAI) by telephone 03000 569408 or by email cirworkinggroup@hmrc.gov.uk.