Can we claim R&D tax relief as well as a creative industry relief?

A company can hold both—they are separate regimes with separate rules—but not for the same expenditure. Where a cost is within the creative relief and also qualifies for R&D relief, the two do not sit side by side, and you do not pick the better one. The R&D side takes priority automatically, and the trigger is entitlement rather than the claim: if you are entitled to R&D relief on the expenditure, it is not eligible for the creative relief, whether or not you make an R&D claim. So the practical question for a games or film company is not "which relief do we want"; it is "which of our costs fall on which side of the line" — and getting that wrong understates one claim and overstates the other.

Can I Claim R&D Relief and a Creative Industry Relief?

What the creative reliefs are

There are two expenditure credits and a set of older-style reliefs that they are progressively replacing.

The Audio-Visual Expenditure Credit covers films and television productions, and the Video Games Expenditure Credit covers video games. Both can be claimed on expenditure incurred from 1 January 2024; both became mandatory for new productions from 1 April 2025; and the reliefs they replace — film, animation, high-end television, children’s television and video games tax relief — cease entirely on 1 April 2027. Expenditure incurred from that date can only be relieved under the credits.

Three older-style reliefs are not part of that reform and continue: theatre tax relief, orchestra tax relief, and museums and galleries exhibition tax relief.

Two additions are worth knowing if they apply to you: an enhanced credit for independent films, for productions beginning principal photography on or after 1 April 2024, and an additional credit for visual effects costs, for expenditure incurred from 1 January 2025.

The rule: not on the same expenditure

The two regimes are built so the same pound cannot be relieved twice, and the mechanism is more one-sided than most people expect.

Take video games tax relief as the worked illustration, because it is the one HMRC has published on. The relief is unavailable for expenditure where the company “is entitled to an R&D expenditure credit under” the merged scheme, or is entitled to relief under the scheme for loss-making, R&D-intensive SMEs. For accounting periods beginning on or after 1 April 2024, these are the two live R&D regimes, so together they cover every claimant.

The word doing the work there is entitled. The bar does not ask whether you claimed; it asks whether you could have. HMRC states the consequence plainly: qualifying expenditure “is not eligible for Video Games Tax Relief (VGTR), whether or not RDEC is actually claimed”, and a company in that position “doesn’t have a choice between claiming RDEC or VGTR in respect of any qualifying expenditure”.

So the consequence runs in a direction people rarely anticipate. A studio that decides not to bother with an R&D claim does not thereby keep that expenditure inside its creative relief. It loses the R&D relief and cannot use the cost in the creative claim either. Deciding an R&D claim is not worth the effort can therefore cost considerably more than the R&D claim was worth — and a company that overlooked its R&D entitlement entirely may have a creative claim that is wrong without anyone having made a decision at all.

The other side of the line is more comfortable: expenditure that does not qualify for R&D relief remains available for the creative relief in the ordinary way, provided it meets that relief’s own conditions.

What this means in practice for a games or production company

Most of what a studio spends is production expenditure, not R&D. Designing levels, writing narrative, creating art assets, composing audio, testing gameplay and building content are the making of the product; they are the creative relief’s territory and they are not an advance in science or technology. The bank’s entry on what actually counts as R&D is the test to apply, and the entry on what does not qualify does more work here than in most sectors.

Where genuine R&D does sit in this kind of business, it is usually in the underlying technology rather than the product itself — engine and toolchain work, rendering or physics problems the field has no established solution to, performance on constrained hardware, novel networking or compression. That is the expenditure the R&D regime reaches, and it is the expenditure the creative relief is barred from.

So the analysis worth doing is a boundary exercise, done once and properly: identify the technical work that meets the R&D definition, keep it out of the creative claim, and put everything else where it belongs. Doing it when you’re gathering costs is far easier than unpicking it afterwards.

Worked example

Illustrative. A studio’s £4 million development budget for a single title, split by which regime each block of cost belongs to.

Cost block	Amount	Regime	Why
Art, animation, audio, narrative, level design	£2,400,000	Creative relief	Making the product. No advance in science or technology
QA and playtesting	£400,000	Creative relief	Testing the product against its own specification
Renderer work solving a problem with no known solution	£650,000	R&D relief	Entitlement arises, so it is outside the creative claim
Netcode for a latency target the field has not met	£350,000	R&D relief	As above
Production management, publishing, marketing	£200,000	Neither	Outside both regimes on their own terms

The £1 million in the two R&D rows is out of the creative claim whether or not the studio makes an R&D claim. A studio that puts the whole £3.8 million of development cost into its creative claim has overstated it by £1 million — and if it also skipped the R&D claim, it has relieved that £1 million under neither regime.

Where claims go wrong

Assuming the choice is yours. For expenditure you are entitled to relieve under the R&D rules, it is not — the creative relief is unavailable for that cost, whether or not you claim. A company that treats the two as alternatives and picks the bigger number has made a claim that is wrong on its face.
Skipping the R&D claim and keeping the cost in the creative claim. This is the same error from the other end, and it is the expensive one: the expenditure is out of the creative relief regardless, so the company gets no relief.
Never having tested whether the R&D entitlement exists. Because the bar turns on entitlement rather than on claiming, a company that has simply never looked at whether its technical work qualifies cannot assume its creative claim is safe. Even a company with no intention of making an R&D claim must do the R&D analysis.
Treating the whole development budget as R&D. Making a game or a film is not research and development because it is difficult, creative or expensive. Most of the budget belongs in creative relief, and a claim to the contrary will not survive contact with the definition.
Doing the split retrospectively. The boundary between production work and technical R&D is a judgement made best by the people who did the work, while they remember it. Reconstructed a year later from a cost ledger, it is both harder to draw and harder to defend.
Forgetting the grant and subsidy angle. Creative reliefs aren’t the only thing that interacts with an R&D claim in this sector — public funding does too, and under its own rules. See grant funding and R&D claims.