Brought to you by
myfirmsapp

Myriad Associates helps businesses maximise tax reliefs.

Save content
Have you found this content useful? Use the button above to save it to your profile.

Video Games Tax Relief: A quick guide

29th Jul 2022
Brought to you by
myfirmsapp

Myriad Associates helps businesses maximise tax reliefs.

Save content
Have you found this content useful? Use the button above to save it to your profile.

The Video Games Industry in the UK is booming, contributing around £1.25 billion to our GDP. Video Games Tax Relief (VGTR) is a government tax incentive designed to encourage employment and investment in this sector by assisting with the cost of video games development.

Claiming VGTR is a great way for your clients to gain the edge in what is an incredibly competitive global industry.

What is Video Games Tax Relief?

Video Games Tax Relief gives UK companies some extra financial support to develop video games; this could be physical content or download-only. It forms part of a suite of eight creative tax reliefs offered by the government.

Tax relief can only be used for core expenditure, including aspects like design, production and testing of video games.

How much is VGTR worth?

The value of the Video Games Tax Relief for a video game which has been entirely developed in the UK or the European Economic Area (EEA) is granted at 20% of qualifying spend. In short, this refers to the amount of expenditure on everything from designing to testing the game (including DLC alongside other spending required after release). However, it excludes debugging and maintenance costs as well as the costs involved in the design of the original concept.

For example, if a game’s eligible spend is £1 million, with all costs incurred within the EEA, the relief in terms of value will be £200,000 (20% of £1 million).

How can the value of VGTR be maximised?

Your client will naturally want to claim the maximum amount of VGTR they’re entitled to. This is why it’s well worth partnering with VGTR specialists like us at Myriad Associates. In fact, we often find those who have attempted a claim without specialist support in the past have often left money on the table.

We are experienced advisers who are clued up in the finer details of the latest VGTR rules and who can deal with HMRC (whose rules are not always obvious). Having worked solely in the field of R&D tax reliefs and funding for the last 10 years, we can not only maximise your clients’ claim but also free you up to get on with everything else.

Who will qualify for VGTR?

A company is likely to be eligible for Video Games Tax Relief if:

  • They are actually a company. Partnerships, individuals and Limited Liability Partnerships are not able to claim. The company must be a ‘video games development company’ (VGDC).
  • The company is subject to UK Corporation Tax

Furthermore, the company must be involved directly with the production of the video game. It must:

  • Have been responsible for developing, producing and testing the game
  • Have been actively involved in key decisions around the production of the video game
  • Have paid directly for the goods and services related to the game. This includes those which are contracted

Only one Video Games Development Company is allowed per game.

Additionally, it is essential that the video game passes a Cultural Test. Administered by the British Film Institute (BFI), the test certifies that the video game is a British production. It’s a points-based test that helpfully has a low pass threshold (only 16 out of 31 points are needed), so it’s easy for games to be accepted. In supporting your clients, it’s worth familiarising yourself with the BFI's Cultural Test for video games.

Don’t forget too that certain types of video game cannot attract VGTR. These are games that include any element of pornography or gambling, as well as extreme material. Any games that were also developed specifically for advertising purposes are also exempt from the relief.

How do you apply for Video Games Tax Relief?

If you think one or more of your clients could be eligible for VGTR, you can find out more about the scheme and how to apply on our Video Games Tax Relief page. Packed full of information about what your client needs to include in their submission and how to pass the Cultural Test, it’s designed to give your client’s business the best chance of success.

Can my client claim both VGTR and R&D tax relief at the same time?

The short answer is yes - they very likely can (we wrote a blog post on this recently). It is possible to claim both VGTR and R&D tax relief but again it’s highly recommended your practice partners with R&D tax specialists like us to make it work. Get in touch.

Why partner with Myriad Associates?

At Myriad Associates we know that navigating the application process for Video Games Tax Relief can be far from straightforward. Understanding the finer details and getting your head around ever-changing regulations is a time-consuming thing for any business or accountant.

We are specialists in our field and our team of friendly tax professionals are on hand to guide you and your clients through the process of claiming VGTR. From start to finish we can work on an application on your client’s behalf and answer any questions that crop up along the way.

Why take it all on when you don’t have to?

Call us today on 0207 118 6045 and speak to one of our team or use our contact page. We’ll be pleased to discuss your client’s individual business requirements and get them on the road to potentially thousands in additional tax relief.