Being part of the British Video Games Industry right now must be extremely exciting. According to TIGA, “the non-profit trade association representing the UK’s games industry”, it makes Britain £514m in taxes. The global market has grown to an enormous value of $96b, from $68b just five years ago.

But TIGA also point out that “29 per cent of UK games companies that have existed at any stage in the last five years have closed down.” The investment necessary to create and market successful video games is huge. And that’s where Video Games Tax Relief (VGTR) has been an amazing financial boost to the small numbers of companies that claim it.

The video game tax relief comes under one of the 8 creative industry corporation tax reliefs given by HMRC and is a separate scheme to R&D tax credits.

VGTR: The Figures

In 2016-17, 280 successful VTGR claims were made. The total amount of these claims was £73million. These claims relate to 90 video games that had £163m UK expenditure. You can make more than one claim during the creation of one game. Different parts of the process can be eligible as separate entities.

After a long campaign by TIGA, VGTR started in April 2014. Since then, more than £690m has been invested in the industry in Britain. Since it began, there have been 420 successful claims worth £119m and resulting in 295 completed video games.

VGTR and your company

You’re probably thinking the same question that all of our clients start with – how does VTGR apply to me?

VTGR is worth around 20% of your development and production costs, that you get back as tax relief. Even if you make a loss on your game, you can get 25% tax credit if you surrender the loss. HMRC have not set a minimum or a maximum spend on each game.

There are some basic criteria that your company must meet and slightly more complex regulations that your video game must adhere to.

The basic criteria for your business are that you are registered in Britain with Companies House, pay Corporation Tax and are designing and producing a video game that is for public use. The project surrounding the game will have core costs and you must have spent at least 25% of this in the EEA.

Part of your game’s eligibility is the interesting BFI certification of your game as British. We explain this further in our free VGTR Guide. It also contains information about what core costs actually are, the type of games that can get VGTR and what the application process entails.

You don’t have to own intellectual property rights to the tech, or have a finished game in order to apply. It is important to bear in mind that R&D Tax relief and VGTR cannot be applied for simultaneously, but we will apply our expertise in both in order to calculate the best option for your business. Whatever you do, don’t miss out on this valuable investment for your next game.

 

Jamie Smith