Video Games Tax Relief
People who work in the Video Games industry are constantly innovating, and may well be in a position to claim R&D Tax Credits, but there is an additional cultural tax relief that might be applicable for them, called Video Games Tax Relief.
We can help you understand if you qualify for Video Games Tax Relief and how to claim it. This page provides a brief summary of what is involved, but please contact us and we’ll be happy to discuss your case.
What is Video Games Tax Relief (VGTR)?
Video Games Tax Relief (VGTR) is a government scheme that allows UK game developers to apply for tax relief funding from HMRC. The computer game must qualify as being British under the Video Games Cultural Test which is administered by the British Film Institute (BFI). Video Games Tax Relief is part of the Creative Sector Tax Relief which also covers film production, animation and high-end television. Video Games Tax Relief is also known as the UK Games Tax Relief Scheme.
What are the main conditions of Video Games Tax Relief?
To be eligible for Video Games Tax Relief, your company must be responsible for the majority of the planning, designing, developing, testing and producing of a game. This company will be called the Video Games Development Company (VGDC). At least 25% of your eligible costs must be incurred in the European Economic Area.
If two or more companies are working on the same game, only one may claim for VGTR. Therefore it’s important to establish which company is the Video Games Development Company (VGDC) and will be making the claim.
What devices are eligible for Video Games Tax Relief?
A computer game developed for any platform can be claimed, this includes:
- Video console games
- Games for PCs
- Games for smartphones, tablets, and other mobile devices
What type of computer games don’t qualify for Video Games Tax Relief?
- anything produced for advertising or promotional purposes
- anything produced for the purposes of gambling (within the meaning of the Gambling Act 2005)
What is the video games cultural test?
The British Film Institute (BFI) is responsible for assessing applications for British video game certification. A Video Game Development Company (VGDC) needs to make an online application for each computer game that they would like certifying as a British video game. You can apply for an interim certificate if the game is still under development or has not been started and a final certificate once it has been completed and made available to the public. A copy of the final video game will be reviewed by BFI before issuing a final certificate.
In order to be certified as a British video game, the BFI must be satisfied that the video game passes the relevant cultural test. The cultural test for video games is set out in The Cultural Test (Video Games) Regulation 2014. A video game will pass the cultural test if it is awarded 16 points out of a possible 31. The test looks at the cultural content of the game, its cultural contribution, its cultural hubs, and its cultural practitioners. For more information see the cultural test for video games.
In addition to completing an application form for each game a Statutory Declaration to certify that the truth of the particulars in the application is also required. The Statutory Declaration may be made either before a practising solicitor, general notary, Justice of the Peace or other officer authorised by law to administer a statutory declaration under the Statutory Declaration Act 1835.
An Accountants report is required if an application for a final certificate relies upon points in Section C and/or Section D of the cultural test. The Accountant Report must be prepared by a person who is eligible for appointment as a company auditor under Section 1212 of the Companies Act 2006.