10 September 2018

Tax incentives for UK’s video games industry jump by 30%

Use of tax incentives to drive growth in the UK’s video game industry has risen by over 30% in the last year

Statistics from HMRC show £105 million was claimed in Video Games Tax Relief (VGTR) in 2017/18, up from £79 million in 2016/17. 345 companies were granted VGTR in the last year – a 20% rise, up from 285 in 2016/17.

VGTR aims to make the UK an attractive destination for video game companies through offering enhanced tax relief on up to 80% of the total expenditure on designing, producing and testing a game.

The rise in tax reliefs being claimed signals a welcome return to expansion for the industry in the UK, which had faced a period of slow growth in recent years.

The UK video games industry grew quickly in the 1990s on the back of such runaway successes as the Tomb Raider and Grand Theft Auto series. However, growth in the games industry in the US, China and Scandinavia has eclipsed some of the early success of the UK.

The VGTR means that games businesses are incentivised to stay in the UK to make their new game, or relocate from other countries, with a number having already relocated development activity from the US, China and other locations.

Some of the UK’s most successful computer games companies include:

  • Criterion Games, which has worked on the ‘Star Wars: Battlefront’ series as well as several titles in the ‘Need for Speed’ series
  • 4J Studios, which has produced versions of the ‘Minecraft’ series for the Nintendo Switch and 3DS
  • Codemasters, which produces several major racing titles, including the F1 and DiRT series
  • Frontier Developments, which is best known for ‘Elite Dangerous’, and is working on a new ‘Jurassic Park’ game
  • King London, part of the King Digital group, which shot to fame thanks to the ‘Candy Crush Saga’ series
  • PES Productions, which has been credited with turning around the fortunes of the ‘Pro Evolution Soccer’ games

Sarah Friend, Partner at Moore Stephens says: “The increased amount of tax relief claimed by video game companies demonstrates continued growth in the UK video games industry.

“The UK is aiming to be a world leader in video game production, and kickstarting that through use of targeted tax reliefs seems to be yielding results already.

“Attracting video game businesses from overseas to relocate to the UK is a critical part of building a globally-competitive video games industry. We’ve certainty seen examples of that happening and the VGTR has played a key part in driving it.”

To discuss how we can support your business to claim Video Games Tax Relief, R&D tax relief or relevant grants – please contact Kirsty Murray

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