What is Video Games Tax Relief (VGTR)?

What is Video Games Tax Relief?

Video Game Tax Relief (VGTR) is a creative industry tax relief incentive, funded by the UK government.

VGTR gives UK game developers a tax rebate worth up to 20% against the money they spend on the design, production, and testing of a new video game.

Who is eligible for Video Games Tax Relief?

VGTR applies to Video Games Development Companies (VGDCs) engaged in the making of:

• a British video game
• that is intended for supply, and
• at least 25% of core expenditure is incurred on goods or services provided from within the UK or European Economic Area

What can I claim?

Those Video Games Development Companies that are entitled to VGTR can claim:

• an additional deduction in computing their taxable profits, and
• where that additional deduction results in a loss, to surrender losses for a payable tax credit.

Both the additional deduction and the payable credit are calculated on the basis of European core expenditure up to a maximum of 80% of the total core expenditure by the Video Games Development Company. Core expenditure is expenditure on design, production, and testing.

History of VGTR

Since Video Game Tax Relief was introduced in 2014, 1,640 games have made claims, with UK expenditure of £4.4 billion.

In the year ending March 2021, £180 million of Video Games Tax Relief was paid in response to 350 claims, representing 640 games (average of £514k per claim, £281k per game). The amount of relief increased by 48% compared with the previous year. This can be explained by the timing of large payments for a small number of very high-budget games and underlying growth in the value of claims. A total of £624 million has been paid since the relief was introduced.

If you’d like to find out more about how a Video Games Development Company (VGDC) is defined, please click here. 

How TBAT can help

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