Video Games Tax Relief & Expenditure Credit

Video Games Tax Relief

Video Games Tax Relief (VGTR) provides up to 20% of the core production costs of a game. It can be claimed on whichever is the lower of either 80% of total core costs or the amount of European Economic Area (EEA) core costs.

If a game is profitable, VGTR can be used to reduce a Corporation Tax bill. If it makes a loss, claimants can receive a cash payment from HMRC at a rate of 25%.

VGTR can be claimed for any video game that meets the following criteria:

• certified as British by the British Film Institute
• intended for supply to the general public
• at least 25% of core costs (spent on design, production and testing) relate to activities in the EEA

Companies have up to 1 year after the company’s filing date to make, amend or withdraw a claim. For accounting periods beginning on or after 1^st April 2024, this has been extended to 2 years after the end of the period of account the claim relates to.

Video Games Expenditure Credit

Video Games Expenditure Credit (VGEC) was introduced in January 2024 to replace VGTR. A transition period has been put in place allowing games still in development up to 31^st March 2025 to claim VGTR until 1^st April 2027. From 1^st April 2025, all new games must claim VGEC.

Video games companies who claim tax relief can claim VGEC on qualifying expenditure incurred from 1st January 2024. VGEC offers a credit rate of 34% of qualifying expenditure which is the lower of either 80% of total core costs or the amount of UK core costs.

VGEC can be claimed for any video game that meets the following criteria:

• certified as British by the British Film Institute
• intended for supply to the general public
• at least 10% of core costs (spent on design, production and testing) relate to activities in the UK

Companies have up to 2 years after the end of the period of account to which the claim relates, to make, amend or withdraw a claim.

To qualify for either VGTR or VGEC companies must be directly responsible for designing, producing, and testing the game and actively engaged in its planning and decision-making. They must also directly negotiate, contract and pay for rights, goods and services.

Relief cannot be claimed on games that are produced for advertising, promotional purposes or for the purposes of gambling.

Whilst VGEC offers a higher rate of relief, the qualifying criteria for this new incentive focuses on expenditure incurred in the UK, rather than the EEA. VGEC also eliminates the previous cap on subcontracting, which was set at £1 million per game for VGTR.

From 1^st April 2024, companies claiming either VGTR or VGEC must complete an additional information form to support their claims.

For more information or support with claiming Video Games Tax Relief or Video Games Expenditure Credit, please complete and submit the short form below.