13 April 2017
If your company develops and produces video games in Britain, you could be entitled to claim Video Games Tax Relief (VGTR).
The Video Games Tax Relief (VGTR) allows qualifying companies to claim a larger deduction, or in some circumstances claim a payable tax credit, when calculating their tax profits.
VGTR is intended to encourage the development of computer and video games to benefit the high-tech and creative industries, and relates to games produced for video game consoles, phones, mobile devices, tablets and computers.
Companies that incur costs to design, develop and produce commercial video games that promote British culture and values can make a tax relief claim. Your company will be entitled to claim VGTR if:
Core expenditure is defined as spending on designing, producing and testing the game.
To qualify for VGTR, video games must pass a cultural test or qualify through an internationally agreed co-production treaty – certifying that the production is a British video game. In all cases, formal certification is required to qualify.
Certification and qualification is administered by the British Film Institute (BFI) on behalf of the Department for Culture Media and Sport.
Yes, companies that claim VGTR may also claim R&D tax relief in certain circumstances. However, where a small or medium-sized (SME) company claims VGTR in respect of a project, it cannot claim SME R&D tax relief on the same project, as two sets of state aid reliefs cannot be claimed on the same project.
For large companies who carry out research and development and claim under the large scheme, the rules are different. This is because R&D tax relief claimed under the large scheme is not state aid, and therefore the areas of research and development within a project may be eligible for R&D tax relief.
We can help you to identify the associated costs that could be included in the claim that will save you time and enhance the tax relief or tax repayment.
In addition, we can assist you to optimise the tax relief claims by identifying costs specifically for VGTR as well as R&D tax relief.
We can prepare the claim for you and, once the claim has been prepared, we can summarise the information to be submitted to HMRC along with the company’s tax return.
In addition to the VGTR, there are other reliefs that are beneficial to video game studios engaged in the development and production of video games, including:
For further details on any of the reliefs mentioned above, please do not hesitate to get in touch.