Creative Industry Tax Reliefs - Video Games

Video Games Tax Relief (GTR)

Video games development has a long and successful history in this country, but growing international competition, in particularly from Asia and North America, is threatening UK activity at a time of significant technological change.

After seven long years of effort by the UK government and other campaigners (including TIGA and ourselves) Video Game Tax Relief was finally given State aid approval by the EU Commission in March 2014, meaning that it came into effect from 1 April 2014.

The relief is intended to encourage UK video game production, just as technological advances are creating a broad split between 'product-based' development models (focused on specific console games) and newer 'service-based' models (focused on mobile apps and online games).

The legislation has specific rules, for instance:

  • video games must be intended for commercial release
  • games with the primary purpose of advertising or gambling or pornographic are excluded on the basis of self-certification by companies
  • there will be no minimum spend threshold, so the relief can benefit low-cost mobile application development
  • and qualifying development expenditure incurred even after the release of a video game will still be eligible for the relief.

The relief allows for 100% additional tax deduction on qualifying expenditure, up to a maximum of 80% of overall expenditure, with a 25% payable tax credit of qualifying expenditure (equating to 20% of overall expenditure).

Detailed guidance on the scheme was published by HMRC in January 2015

Video games

Video Game Design

Claims can be made under the R&D Tax Relief scheme (if eligible), the Patent Box regime (if eligible) and Games Tax Relief (if eligible) by careful segmentation and documentation, respecting the various schemes rules. Clearly expertise in these areas will be critical to robust claims.

MMP can work with you to make a robust claim under all the regimes available to you. MMP will also assess your eligibility for the BFI cultural test; submit and gain approval from the BFI both in process and at the end of the development. We can help you to identify qualifying expenditure; and to identify the start and end points of qualifying game development, putting a claim together for you without the hassle and time consuming effort needed from you or your accountant.

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