How can I claim Video Games Tax Relief UK (VGTR)?

Video Games Tax Relief UK what you can claim

For Video Games Tax Relief UK, you can claim an additional deduction to reduce your profits or to increase a loss. This will reduce the amount of any Corporation Tax you will need to pay. If you make a loss, some or all of this loss can be surrendered for a payable tax credit at a rate of 25%.

The additional deduction will be the lower of either:

  • 80% of total core expenditure
  • the amount of core expenditure on goods or services that are provided from the European Economic Area (EEA)

Examples taken from HMRC Video Games Development Company manual:

Example 1: core expenditure all European

A Video Games Development Company incurs £200k of core expenditure on a video game, all of it in the UK or EEA.

Actual European core expenditure > 80% of total core expenditure.

The Video Games Development Company can claim Video Games Tax Relief on 80% x total core expenditure. Enhanceable expenditure is £160k.

Example 2: core expenditure part European, part non-European

A Video Games Development Company incurs £400k of core expenditure on a video game, of which £250k is European expenditure. The remainder is incurred in Canada.

Actual European core expenditure < 80% of total core expenditure.

The Video Games Development Company can claim Video Games Tax Relief on actual European core expenditure. Enhanceable expenditure is £250k.

Example 3: co-development

A UK company incurs £500k of core expenditure on a video game. Its co-developer incurs a further £50,000 of core expenditure on the video game.

Actual European core expenditure > 80% of total core expenditure.

The Video Games Development Company can claim Video Games Tax Relief on 80% x total core expenditure incurred by the Video Games Development Company. Enhanceable expenditure is £400k.

Even though combined core expenditure on the video game (by both co-developers) was £550k, the limit is 80% of the total core expenditure incurred by the Video Games Development Company.

How TBAT can help with Video Games Tax Relief UK

Similar to R&D Tax Relief, we help business check their eligibility and support in making claim for Video Game Tax relief UK. Please contact us to discuss how we can help.

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