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:
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.
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.
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.
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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