Lossless audio playback on Apple TV 4K

When I try to playback lossless audio via my Yamaha rx-a1040 av receiver it only outputs as PCM and certainly doesn't sound noticeably better than the 'conventional' audio off my old 2nd gen Apple TV (which outputted as full dolby digital).

All the settings are correct, my Sky Q box outputs in dolby digital, so why is the 4k Apple TV doing likewise?

I intentionally bought the 4k for the lossless audio but this feels like step backwards!