UK Finance Bill would remove creative credits from CIR tax-EBITDA

A targeted tax-EBITDA amendment

Clause 41 of Finance Bill 2026–27 would amend section 407 of the Taxation (International and Other Provisions) Act 2010 (TIOPA). It adds an expenditure credit under Chapter 3 of Part 14A of the Corporation Tax Act 2009 to the list of qualifying tax reliefs, and removes three listed deductions for former film, television and video-games reliefs. Section 407 qualifying reliefs are excluded when adjusted corporation-tax earnings are calculated under section 406. The Bill’s change therefore targets the treatment of credits in the existing Corporate Interest Restriction (CIR) framework; it is not a general rewrite of CIR.^[1][3][4]

Why groups should review the calculation

HMRC says the CIR legislation was not updated when Finance Act 2024 introduced Audio-Visual Expenditure Credits (AVEC) and Video Games Expenditure Credits (VGEC). Those credits are currently included in tax-EBITDA, which can allow affected groups to deduct more interest than intended. Excluding them from tax-EBITDA may reduce the earnings measure and, depending on the group’s figures and method, its available interest allowance. It does not by itself establish how much interest any particular group will be restricted.^[1][4]

Commencement includes a straddling-period rule

Clause 41(2) applies the credit amendment to accounting periods beginning on or after 1 January 2027. For a period that begins before but ends on or after that date, subsections (3) and (4) treat the pre-January and post-January portions as separate periods for this amendment. The credit attributable to the post-January portion is determined by reference to the Part 14A credit calculation, having regard to the amount calculated for the pre-January portion. Clause 41(5) treats removal of the former-relief references as if made by the repeal provision in Finance Act 2024.^[3]

Screen exposure, not a new return

HMRC identifies large businesses within Corporation Tax with more than £2 million a year of net interest and other financing costs as likely to be affected; credit claimants are not necessarily within CIR, and only some of the approximately 1,000 businesses expected to claim the credits are expected to be subject to it. Potentially affected groups should identify AVEC or VGEC claims, their accounting-period start dates and any straddling period, then test the revised tax-EBITDA in their group computation. HMRC anticipates adjustments in interest restriction returns but the reviewed material does not announce a new return type or filing deadline. The Bill record shows the measure remains at the introduced stage, with Commons second reading next.^[1][2][3]