Indie Dev’ Guide 8: Video Games Tax Relief Claims

Introduction

Video Games Tax Relief (VGTR) is a creative industry tax relief for Video Games Development Companies (VGDC) which was introduced in April 2014. VGTR is available for any games that start development before 1 April 2018 and can continue to be claimed until 31 March 2027, at which point only Video Games Expenditure Credit (VGEC) can be claimed. 

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 ‘Cultural Test’

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

Information you will need:

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.

Full list of Guides

• Guide 9: Understanding your Accounts
• Guide 10: British Film Institute (BFI) certification
• Guide 11: Business Expenses
• Guide 12: Withholding Tax on overseas income
• Guide 13: Benefits of an Audit
• Guide 14: Video Games Expenditure Credit
• Guide 15: Taxation of Non-Cash Benefits for Employees and Directors in the Gaming Sector
• Guide 16: Management Accounts and Forecasting in the Gaming Sector
• Guide 17: Bookkeeping Software for the Gaming Sector 

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