20 Jul 2023

Unlocking Growth: A Guide to Video Game Tax Relief in the UK

Ian Davie
Senior Consultant

In recent years, the video game industry has experienced tremendous growth, captivating millions of players worldwide. To foster innovation and support the industry’s development, the government has introduced various incentives, including video game tax relief. This blog post aims to provide an overview of what video game tax relief is, who is eligible to claim it, and the key steps involved in the claiming process. 

Video game tax relief, also known as VGTR, is a government initiative designed to encourage and support the production of video games in the United Kingdom. It offers tax incentives to game developers, helping to reduce the financial burden and facilitate the growth of the industry. To be eligible for video game tax relief, companies must meet specific criteria defined by the UK government and the British Film Institute (BFI). 


Key eligibility requirements  

Cultural Test: The game must pass a cultural test administered by the British Film Institute (BFI). The test evaluates various factors, including the game’s storyline, characters, location, and contribution to British culture. 

Company Structure: The developer must be a UK-based company incorporated in the UK. 

Core Expenditure: At least 25% of the total production costs must be incurred in the UK or EU. This includes expenses related to designing, programming, producing, and testing the game. 

Game Classification: The game must be intended for commercial release to the general public and fall within specific age ratings set by the Pan-European Game Information (PEGI) system. 


Chinese Style Fantasy Video Game

Key Steps to Claiming Video Game Tax Relief 

The process of claiming video game tax relief involves several key steps. While this guide provides a general overview, we would always advise it’s advisable to consult with a tax professional for specific guidance tailored to your situation. Here are the primary steps involved: 

Determine Eligibility: Before proceeding, ensure that your company and game meet all the eligibility criteria set by the government. This includes passing the cultural test and meeting the necessary expenditure thresholds. 

Apply to the BFI for a certificate for the game. You can complete the registration process online through the BFI website. 

Compile Supporting Documentation: Gather all relevant documentation to support your claim, such as detailed production records, expenditure breakdowns, and evidence of compliance with the cultural test. This documentation will serve as evidence during the review process. 

Prepare the Claim: Using the provided guidelines and forms, prepare the claim for video game tax relief. Ensure that the information is accurate and complete, as any discrepancies may delay or affect the outcome of your claim. 

Submit the Claim: Once your claim is complete, submit it to HMRC as part of your accounts, along with your certificate. It’s advisable to retain a copy of the claim and supporting documentation for your records. 

Review and Approval: HMRC will process your claim, which typically takes several weeks or months, depending on the complexity of the claim. 

Receive the Tax Relief: You can claim your tax relief as either a repayable credit if loss making or as a reduction in Corporation Tax. 

Video game tax relief in the UK offers an excellent opportunity for game developers to stimulate growth, foster creativity, and alleviate financial pressures. By understanding what video game tax relief is, who is eligible to claim it, and the key steps involved in the claiming process, developers can unlock the benefits of this incentive and propel their projects forward. Remember to consult official guidelines and seek professional advice to ensure a smooth and successful claim experience. Embrace the opportunities that video game tax relief presents and contribute to the vibrant UK gaming industry. 

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