Video Games Tax Relief

What is Video Games Tax Relief (VGTR)?

 

Video Games Tax Relief (VGTR) was introduced in April 2014 and is part of the government backed creative industry tax relief. In order to show HM Revenue & Customs your company is eligible to claim Video Games Tax Relief (VGTR), your company must hold an interim or final certificate for the particular game being claimed for. These certificates are issued by the British Film Institute (BFI).

To obtain certification from the BFI, your company must pass a cultural test, certifying that the production is a British video game.

You can claim VGTR up to 2 years after a qualifying accounting period.

VGTR is also referred to as the UK Games Tax Relief Scheme.

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Does your video game qualify for tax relief? 

Qualifying Rules

Your company qualifies for and can claim creative industry tax reliefs if it is:

  • Liable to Corporation Tax
  • Directly involved in the production and development of video games

Eligibility

Your company will be entitled to claim VGTR if the video game is British and:

  • the video game is intended for supply, rather than for a marketing tool, for example
  • at least 25% of core expenditure is incurred on goods or services that are provided from within the European
    Economic Area (EEA)

If your company qualifies to claim VGTR your company is also entitled to:

  • an additional deduction in computing its taxable profits
  • where that additional deduction results in a loss, to surrender losses for a payable tax credit

The devices that are eligible for Video Games Tax relief include;

  • Video console games
  • Games for PCs
  • Games for mobile devices such as smartphones and tablets.

The ‘Cultural Test’

To qualify for the creative industry tax reliefs all video games must pass a cultural test with the British Film Institute (BFI), certifying that the production is a British video game.

The BFI will be satisfied with the video game if it achieves 16 points from a possible 31 in the test. The test is broken down into these four sections;

  • Cultural content (up to 16 points).
  • Cultural contribution (up to 4 points).
  • Cultural hubs (up to 3 points).
  • Cultural practitioners (up to 8 points).

Applications can still be sent if the game is under development and a final certificate will be made available once completed. The BFI will then review the completed game before issuing a final certificate.

What information do you need to start a Video Games Tax Relief claim?

1. Confirmation of the start date and end date of the development of each video game subject to a VGTR claim.
2. A copy of the interim or final certificate issued by the British Film Institute for each video game under
development during the accounting period, which confirms a game is culturally British.
3. Details of estimated and actual income for each video game under development, which is subject to a
VGTR claim.
4. Details of estimated and actual expenditure incurred on the development of each game.

Download our Indie Dev Guide to Video Games Tax Relief here

 

Want to learn more?

Get in touch with our in house expert Luke Thomas to see how we can help.

 

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