The UK government has released its latest figures regarding the uptake of Video Games Tax Relief (VGTR) for 2017/18. Since the VGTR scheme was initiated in April 2014, £230m has been paid out in response to 770 claims.
The VGTR scheme aims to promote the sustainable production of culturally relevant video games in the UK. It is aimed directly at companies producing video games and has been available from 2014. In 2017/18, there were 100 video games completed that claimed VGTR, with UK expenditure of £131m. Since the relief was introduced in 2014, 480 video games have claimed VGTR, this accounted for £1bn of UK expenditure. A video game may make several claims during the production process, so the number of video games will be lower than the number of claims presented earlier.
To be eligible for VGTR, your company must be responsible for the majority of the planning, designing, developing testing and producing of a game. This company will be called the Video Games Development Company (VGDC). The VGDC must fall within UK tax jurisdiction and at least 25% of the cost must be incurred in the European Economic Area.
Games developed for any platform can be claimed, including:
As the leading experts in video games tax relief for UK game developers, Myriad Associates recommends the following 6 steps to maximise your VGTR claim:
It’s important to ensure your company is structured in the right way, or you might miss out on specific benefits. Working with a video games tax relief specialist, like Myriad Associates, will ensure you get the best advice when getting your claim underway. With the right experts by your side, you can guarantee a fully maximised claim.
When analysing your claim, HMRC will want to be able to fully and easily understand the reasoning behind the claim amount and how it qualifies for VGTR. To ensure the process runs smoothly and to avoid HMRC firing back any questions, we recommend carefully detailing your claim and breaking down the key areas of expenditure. It’s important to make sure you aren’t trying to claim for anything that’s ineligible for VGTR, and that all your figures add up.
To qualify for VGTR, you need a certificate from the British Film Institute (BFI) that confirms your game has passed the cultural test. The test which seeks evidence of British or European connections in the game’s content, creation and/or creators, assigns points based on a games lead characters, setting, subject matter, dialogue and much more. Passing the test is fairly straightforward and will allow you to apply for your VGTR claim.
Applicants who are not ready to make a full application (information may be incomplete or missing a signed declaration) can submit a draft application and receive a letter of comfort that the video game should pass the cultural test. This letter of comfort will reassure the applicant with their plans and help with financing.
An interim certificate will be issued before a video game is completed if the BFI and Department of Culture, Media and Sport (DCMS) are satisfied that the video game passes the Cultural Test based on the proposals set out in the application
VGTR applies only to expenditure incurred on designing, producing and testing the video game. To simplify the allocation of spend, it is best practice to separate each stage of the development process. This can be as simple as keeping basic records on a spreadsheet that allocates staff and subcontractor time to each stage of each game.
VGTR claims, regardless of whether for an extra finding or a payable credit, can be made up to the first commemoration of the VGDC's documenting date for the accounting period being referred to. As mentioned, it merits applying for an interim certification so as claims can be made quicker and the right to relief does not expire.
Are you applying for VGTR or unsure if you qualify? For more information on VGTR or to find out if you’re eligible, please contact us and we’ll get in touch. Our eligibility calls are free of charge and our no win no fee model ensures your financial risk is minimised.