Video Games Tax Relief (VGTR)

Video Games Tax Relief commenced on the 1st April 2014 and is available to video games production companies within the charge to Corporation Tax.

Subject to the company and the video game production meeting the qualifying conditions as set out in the legislation in Finance Act 2013 and Finance Act 2014 (see links).

How does VGTR work?

VGTR works by enhancing expenditure incurred in the development process and creates an additional deduction to be set against the profit or, where it creates or extends a loss, allows that loss to be surrendered to HMRC for a payable tax credit thus providing the company with either a reduction in their corporation tax liability or a repayable tax credit.

Who qualifies?

Video Games Development Companies (VGDCs) who produce qualifying video games will qualify.

As this is a Corporation Tax relief, sole traders or partnerships which are taxed under Income Tax rules do not qualify.

To qualify as the VGDC it must:

  • be incorporated in the UK or have a UK permanent establishment that falls within the charge to UK corporation tax.
  • be responsible for designing producing and testing the video game
  • be actively engaged in the production planning and decision making throughout the process
  • directly negotiate, contract and pay for rights, goods and services in relation to the video game

How does a video game qualify?

A video game qualifies if it is:

  • intended for supply to the general public;
  • has been certified as a British video game by the BFI.
  • Not less than 25% of the total core expenditure must be European Economic Area (EEA) expenditure.

What is EEA expenditure?

EEA refers to the European Economic Area which includes all of the EU countries as well as Iceland, Liechtenstein and Norway.

EEA expenditure is any expenditure incurred on goods or services provided from within the EEA.

What is the BFI Cultural Test?

In order for a video game (or film, TV programme or animation for that matter) to qualify for the tax relief, it must first be certified as culturally British.

The video game achieves certification by achieving a minimum of 16 points from a possible 31 available covering the following sections:

  • Cultural content: (16 points available)
  • Cultural contribution (4 points available)
  • Cultural hubs: (3 points available)
  • Personnel: (8 points available)

Applications for certification are made to the BFI Certification Unit.

Whilst the team at the BFI are universally lovely and helpful, the process can a little clunky.

Ideally, a game would achieve the 16 points needed in Sections A and B alone, which will save the time and cost of obtaining an accountants’ report.

Which expenditure qualifies for enhancement?

VGTR is only available on core expenditure that is European Economic Area expenditure. Core expenditure is an expenditure that is incurred on:

  • designing;
  • producing, and
  • testing the game.

Not all expenditure is core expenditure.

Expenditure that is not core expenditure is referred to as non-core expenditure.

Non-core expenditure includes expenditure on:

  • original concept design
  • debugging
  • post-release maintenance
  • financing
  • marketing

How is VGTR claimed?

VGTR is claimed through the Company Tax system which means that claims must be made within a Company Tax Return or an amendment to a Company Tax Return.

Claims must include computations in respect of all qualifying productions and detail the income received and the expenditure incurred.

The expenditure should be split between core and non-core and information should be provided of any apportionments used. 

As specialists in Video Games Tax Relief, we are here to help you achieve the maximum benefit available whilst making the process as simple as possible.

If you would like to download our free fact sheet on Video Games Tax Relief - sign up here.

Testimonials

"I am so pleased and relieved that Graham got in touch with me about Theatre Tax Relief. I had mistakenly thought that we were not eligible but so far Graham has claimed nearly £100,000 in tax credit for us. This is not only an enormous benefit and can be ploughed back into the work that we do but it would have been extremely short-sighted of us not to be claiming the money that is due to us. Graham has made the whole process so simple and easy. I cannot recommend him highly enough"
Sarah Gobran, Co-Founder & Producer of The Guildford Shakespeare Company
"NCO engaged Graham at the start of 2019 and has developed a wholly positive and ongoing relationship ever since. Not only has Graham increased our understanding of OTR and how it applies to NCO, he has taken all the stress and strain away from the process. His previous experience as a tax specialist at HMRC has proved invaluable as has his ability to explain the complexities to us in a way we can understand! I cannot recommend Graham more highly. "
Sophie Lewis, Managing Director of the National Children's Orchestras of Great Britain
"Graham explained very clearly what was needed and then delivered exactly as he said he would. Graham prepared the computations and submitted the claims on our behalf and we didn't have to deal with HMRC at all. This was the easiest piece of tax work that we have ever had to do"
Matthew Quirk of The Merry Opera Company
"Our accountant struggled with VGTR so we engaged Graham and his company. Graham prepared all the necessary computations and submitted the claim on our behalf. This was paid by HMRC without question and in an amount in excess of what we had previously expected. We are delighted and cannot recommend Graham or his company highly enough"
Ashley Stancill, Director at HyperSloth Games
"With no clear guidance on how to claim Theatre Tax Relief and after spending a considerable amount of time consulting with colleagues, accountants, reading huge, incomprehensible HMRC guidelines and generally worrying that the company was missing the TTR boat, I spoke to Graham. Everything was plain sailing for us after the initial consultation – with very little effort on our part, Graham made a successful submission and we have just received a substantial payment. I am delighted at the outcome and have no hesitation in recommending Graham and his company"
Sue Andrews, former Executive Director of Northern Broadsides Theatre Company
"I have been aware of Theatre Tax Relief for a few years now but the process of claiming the money was daunting. We didn't have the resources or the expertise to make the claim. Graham made the process of claiming Theatre Tax Relief very straight forward. He kept me informed of developments and answered all my questions. I provided him with information and he did the rest"
Shona Rattray, General Manager of the Hopscotch Theatre Company
"For a small theatre company like us navigating Theatre Tax Relief was a daunting prospect. Having the support and expertise of Creative Tax Reliefs was absolutely brilliant. Graham explained everything and did a fantastic job sorting out the different projects we had been working on, calculated what we could claim and did all the leg work. The Tax Relief we received from HMRC helped us take our show to the Edinburgh Fringe, something we certainly couldn't have done without this extra funding. We would highly recommend Creative Tax Reliefs and will certainly be using them again in the future. "
Jasmine Cole of Jasmine Cole Productions
"When I first heard from Graham I have to say I was more than a little sceptical. Why had no one mentioned this to us before? The information seemed so monumental – shouldn’t it have been on the news? Within a few emails and phone conversations, we had provided all the information necessary and had everything thoroughly explained to us. Within two weeks we had received the tax credit into our bank account! Creative Tax Reliefs are amazing!"
Clare Molyneux, Artistic Director of Open The Door (Theatre in Education) C.I.C.
"When Graham first contacted us, we hadn’t heard of Theatre Tax Relief, which made us fairly wary. Graham took the time and care to explain it all to us and how the process would work. Initially, we were sceptical and worried about the time it would take for us to collate all the information needed for the claim. However, we needn’t have worried, Graham helped us every step of the way and made the process simple and quick. We would recommend working with Graham in an instant."
Fliss Green, Senior Strategy & Project Manager of Chain Reaction Theatre Company
"It was a pleasure to work with Graham. He explained the process very clearly, prepared all the necessary computations and submitted the claims on our behalf. We are extremely delighted with the outcome and have no hesitation whatsoever in recommending Graham and his Company to others"
Sylvia Collins of the Huddersfield Light Opera Company

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