“Our accountant struggled with VGTR so we engaged Graham and his company. Graham prepared all the necessary computations and submitted the claim on our behalf. This was paid by HMRC without question and in an amount in excess of what we had previously expected. We are delighted and cannot recommend Graham or his company highly enough”
Ashley Stancill, Director at HyperSloth Games
What is VGTR?
Video Games Tax Relief commenced on the 1st April 2014 and is available to video games production companies within the charge to Corporation Tax.
Subject to the company and the video game production meeting the qualifying conditions as set out in the legislation in Finance Act 2013 and Finance Act 2014 (see links).
How does VGTR work?
VGTR works by enhancing expenditure incurred in the development process and creates an additional deduction to be set against the profit or, where it creates or extends a loss, allows that loss to be surrendered to HMRC for a payable tax credit thus providing the company with either a reduction in their corporation tax liability or a repayable tax credit.
Who qualifies?
Video Games Development Companies (VGDCs) who produce qualifying video games will qualify.
As this is a Corporation Tax relief, sole traders or partnerships which are taxed under Income Tax rules do not qualify.
To qualify as the VGDC it must:
How does a video game qualify?
A video game qualifies if it is:
What is EEA expenditure?
EEA refers to the European Economic Area which includes all of the EU countries as well as Iceland, Liechtenstein and Norway.
EEA expenditure is any expenditure incurred on goods or services provided from within the EEA.
What is the BFI Cultural Test?
In order for a video game (or film, TV programme or animation for that matter) to qualify for the tax relief, it must first be certified as culturally British.
The video game achieves certification by achieving a minimum of 16 points from a possible 31 available covering the following sections:
Applications for certification are made to the BFI Certification Unit.
Whilst the team at the BFI are universally lovely and helpful, the process can be a little clunky.
Ideally, a game would achieve the 16 points needed in Sections A and B alone, which will save the time and cost of obtaining an accountant’s report.
Which expenditure qualifies for enhancement?
VGTR is only available on core expenditure that is European Economic Area expenditure. Core expenditure is an expenditure that is incurred on:
Not all expenditure is core expenditure.
Expenditure that is not core expenditure is referred to as non-core expenditure.
Non-core expenditure includes expenditure on:
How is VGTR claimed?
VGTR is claimed through the Company Tax system which means that claims must be made within a Company Tax Return or an amendment to a Company Tax Return.
Claims must include computations in respect of all qualifying productions and detail the income received and the expenditure incurred.
The expenditure should be split between core and non-core and information should be provided of any apportionments used.
As specialists in Video Games Tax Relief, we are here to help you achieve the maximum benefit available whilst making the process as simple as possible.
To download our factsheet on Video Games Relief – click here
This year, Creative Tax Reliefs Limited proudly enters its 10th year following incorporation—a milestone that reflects a decade of supporting the UK’s vibrant creative industries.
The government has just announced that the temporary higher rates of theatre, orchestra, and museums and galleries tax reliefs won’t, as planned, return to pre-Covid
As part of HMRC’s changes to the Creative Industry tax reliefs, all claims will need to be supported by the completion of an online mandatory information
HM Treasury has issued a consultation document into proposed changes to the Animation, Film, Television and Video Games tax reliefs. HMRC has effectively split the