What is Video Games Tax Relief?

Did you know that Video Games Tax Relief (VGTR) allows UK game developers to claim back 20% of their production costs?

Who can make a claim?

To make a claim, you must be a limited company with a qualifying video game trade, and you have to apply to the British Film Institute (BFI), for a certificate, just to prove that the game is culturally British. This is based on location and character, and a few other factors.

How to apply for a BFI certificate

To apply for a certificate, this can be done through an application on the British Film Institute website, and there’s a total of 31 points for which your game needs 16 to qualify. Find out how points for the cultural test for video games are allocated here.

What costs qualify for Video Games Tax Relief?

Core costs of the video game qualify. These relate to design, testing and production of the game. This will mainly be salary and subcontractor costs. As an example, we’ve had a client who remunerated themselves via dividends, but this was not eligible to be claimed as it is not classed as earnings.

What is Video Games Tax Relief?

The relief is an 80% enhanced deduction for the core costs. For profit-making companies, this will result in a tax saving of 19% on the enhanced deduction. For loss companies, they can surrender the losses for 25% tax credit. We found this to be extremely useful for start-up companies where cash flow is potentially an issue.

How to make a claim

Claims can be submitted to HMRC with the company tax return. This usually has to be submitted within 2 years of the company’s accounting year-end. So for example, a company with the 31st March 2019 year-end, would have to be submitted by the 31st March 2021. Repayment normally takes 4-6 weeks, but this can vary on busy periods.

In conclusion

We hope this has been a useful overview of Video Games Tax Relief, but if you have any questions or would like to discuss how we can help you make a claim, please feel free to contact Grant snedden (grant.snedden@hlca.co.uk) or complete the contact form below.