Video Games Tax Relief - How to pass the BFI cultural test
What is Video Games Tax Relief?
Video Games Tax Relief offers an excellent tax relief incentive for UK video games developers, who can benefit by claiming back up to 20% of their production costs. Since coming into effect on 1st April 2014 over 480 games have collectively benefited to the tune of £230M due to VGTR.
To be eligible, the UK Video Game Development Company (VGDC) must be responsible for the majority of the planning, designing, developing, testing and producing of the game. At least 25% of the eligible cost must have been incurred within the European Economic Area
To be certified as a British video game (a key requirement of the VGTR claim) the game must pass a Cultural Test, which is administered by the British Film Institute (BFI). The test is based on points which are awarded across 4 sections, with applications needing to achieve 16 out of 31 available points to qualify as a British video game and therefore be eligible to claim VGTR.
Typically, most businesses will seek to apply for points in Section A – Cultural Content (which focuses on the game’s locations, characters, subject matter and dialogue.), Section C – Cultural Hubs (where work took place) and section D – Practitioners (where the development team are based), skipping Section B, Cultural Contribution. Section B is often skipped because, unlike the other 3 sections, Cultural Contribution is very subjective and open to interpretation. This uncertainty has caught out many applicants, resulting in lacklustre application and even delaying claims by up to 3 months.
To help your business avoid this issue, we’ve outlined some advice on how to complete section B, Cultural Contribution and maximise your VGTR claim. Click here to read the full article