Research & Development FAQs

What is VGTR?

VGTR stands for Video Games Tax Relief and is also called UK Games Tax Relief Scheme. It is a government tax incentive designed to support British R&D. If you qualify, you can reclaim 20% of your production costs. It is administered by HMRC and is part of the Creative Sector Tax Relief.

Who is the VGTR scheme for?

Any British game developer that meets the full criteria is eligible to claim Video Games Tax Relief.

How much is VGTR worth?

The value of your VGTR claim is dependent on whether the game made a profit or loss. If the game makes a profit, your claim is worth a maximum of 20% of your production costs. The amount of tax relief you receive is calculated on either 80% of your core expenditure or your EEA spend (whichever is the lower figure).

If your game makes a loss, you are entitled to claim for a 25% tax credit on that surrendered loss. This loss is worked out as either the qualifying expenditure or the available loss (whichever is the smaller amount).

Are there any games that do not qualify for VGTR?

Yes, there are two types of games that are exempt from VGTR:

  • Games connected to gambling. HMRC use the Gambling Act 2005 for this definition.
  • Games with advertising and promotional objectives.

Does it matter what platform my game is designed for?

VGTR applies to games that are to be played on any platform: smartphone, video console, PC, tablets.

What are the main eligibility criteria for claiming VGTR?

There are three main criteria to meet before you submit a Video Games Tax Relief application:

  • A minimum of 25% of your expenditure has been spent in the EEA
  • Your game passes the ‘Cultural Test’, as defined by the British Film Institute
  • Your company must do the majority of the work on the game; at all levels, from planning through to production.

What if more than one company is working on a game?

The rules state that only one company may claim VGTR for the development costs of a game. If you are working with other companies, you must decide which of you is going to be the ‘Video Games Development Company’ for the purposes of the claim. The designated company is then responsible for making the VGTR claim.

What is core expenditure?

Core expenditure are all the costs that are applicable for VGTR, including: planning, design, testing, production.

Anything that is considered ‘non-core’ is not eligible for VGTR, including costs like: pre-planning work, advertising, insurance and entertaining.

What is the BFI cultural test?

This is an assessment of your game to determine if it can be called a ‘British’ video game. An interesting concept that is the responsibility of the British Film Institute. You have to submit one online application per game and different levels of certification can be issued, depending on its stage of development. You do not have to wait until the game is finalised before you apply, but there will be another review done on its completion, before the BFI will sign off the final certificate.

There are four parts to the ‘Britishness’ test, all with a corresponding number of points available. You must achieve 16 out of 31 points to pass the test. Two elements consider where the game was made and who made it. How much of your game’s production is done in Britain and how many of your staff are from the EEA? The other two parts look at your game’s content; how much is set in the UK and how does it represent British culture. There are more specifics about the Cultural Test in our Video Games Tax Relief Guide.

What is the Statutory Declaration?

You must send your Statutory Declaration with your VGTR application. It is to certify that the details of your application are truthful and must be done by an authorised officer of the law. This could be a notary, Justice of the Peace or a solicitor. This is a legal requirement under the 1835 Statutory Declaration Act.

What is a VGTR Accountant’s Report?

You may also have to send an Accountant’s Report, if your application is based on Sections C or D of the Cultural Test. These are the sections relating to where game development is happening and the nationality of your staff. The Accountant’s report verifies your accounts, regarding what percentage of your core expenditure was spent in the UK. It also substantiates the nationality of your employees working on the game.

The only people authorised to produce such a report are those who qualify as a company auditor under Section 1212 of the 2006 Companies Act.

What are the different levels of certification?

There are three levels of certification issued by the BFI:

  1. Letter of comfort: This is an approval of a draft application that you can submit before you have all the relevant supporting documents in order. It is designed to ‘comfort’ the applicant to know that the game should pass the Cultural Test. It cannot be used to claim VGTR, but could be helpful when securing financing.
  2. Interim Certificate: You get an Interim Certificate if your Cultural Test application has passed, but your video game development is not yet complete.
  3. Final Certificate: This is only issued when your video game is complete and your application is successful. The definition of ‘complete’ is that it is at the stage where multiple copies could be made and distributed.

How long does the Cultural Test process take?

It takes the BFI 28 days to process an application for the Cultural Test. As long as everything is completed accurately and all documents are included at the time of submission. If they need to chase you up for information, or make checks on anything that is unclear, it will take longer. If you have a deadline in mind for your VGTR application, you should include this with your application.

Can I claim VGTR and R&D Tax Credits?

You can only apply for tax relief on the same eligible cost through one of these schemes. So, you can apply for VGTR and R&D Tax Credits, as long as you allocated particular costs to each scheme. This further complicates the applications for both, but can help you maximise all your eligible tax relief allowances.

How do I make a VGTR claim?

Your VGTR claim is done within your CT600 Company Tax Return. Each video game is considered a separate ‘trade’ and will need its own balance sheet. There are a lot of specific rules around VGDCs’ taxable profits and losses from video game development that you must take into careful consideration.

Should I use an expert to help be make a VGTR claim?

At DSM, we make a complex application process very simple for our clients:

  • Find all the video games that qualify
  • Identify all your core expenditure
  • Complete the BFI Cultural Test
  • Help you make the best decision for you regarding applying for R&D Tax Credits and/or VGTR

Everything we prepare is right first time and geared towards maximising your tax relief claim.


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