About VGTR
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What you need to know about
Video Games Tax Relief
Video Games - a great British industry
Since the introduction of the Brown Box Odyssey designed by Ralph Baer in 1967, the UK games industry has gone from bedroom coding to global leadership, combining arts and technology to deliver some of the most successful games in the history of the medium.
Video Games Tax Relief (VGTR) provides an additional incentive for UK games developers to maintain our world leading status in games development.
History
In the 2012 Budget the Government announced that the existing Film Tax Relief style tax incentives would be extended to the UK's animation and video game producers alongside other creative sector tax incentives.
Policy intent
VGTR was introduced to encourage firms who may have been forced to leave the UK for other territories, offering tax incentives, such as Canada, in order to cut costs, to remain and invest in games development in the UK.
Introduction
Animation Tax Relief (ATR) was introduced in 2013 and Video Game Tax Relief (VGTR) was introduced in April 2014 after full approval of the incentive was given by the European Commission in March 2014.
Impact
An ipsos MORI report Video Games Tax Relief evaluation research report for HM Revenue and Customs in March 2017 proved positive feedback and "Developers felt that VGTR had set the UK industry on a path to becoming globally competitive again".
Who can claim VGTR?
VGTR applies to Video Games Development Companies engaged in the making of a British video game which is intended for supply and where at least 25% of core expenditure is incurred in goods or services provided from within the European Economic Area
More details hereHow to claim
All relevant video games must pass a 'cultural test' which administered by the British Film Institute (BFI) on behalf of the Department for Culture, Media and Sport. However this is just one step in the process.
Learn More
What can be claimed?
Video Games Development Companies that are entitled to VGTR can claim:
- a deduction in their tax bill.
- if the game is loss making then companies can claim a payable tax credit.
Both the additional deduction and the payable credit are calculated on the basis of EEA core expenditure up to a maximum of 80% of the total core expenditure by the VDGC. Core expenditure is expenditure on design, production and testing
Like most aspects of Technology Tax Reliefs, the collection and collation of data in order to submit a claim and receive the benefit are not always straight forward. Like to find out more?
Source: UKIE August 2020.