Video game tax credits, also commonly referred to as VGTR (video game tax relief), are a UK government incentive to help game developers claim tax credits on their projects.
That’s because the production costs associated with developing video games can be a huge barrier when it comes to getting your project over the finishing line.
Fortunately, this guide will help you see if you’re eligible for VGTR and how to unlock valuable extra funding.
VGTR is intended to provide a much-needed tax rebate for the costs spent designing, producing, and testing video games but, as always, there are some limitations and caveats to qualify.
It’s important to note that if the company most involved in the production of the video game is not a UK corporation tax payer, then it won’t be eligible for video games tax relief. As you can see, there’s a lot to get your head around. That’s why we’re here to help prepare your VGTR claim.
The BFI cultural test is a points-based test used to classify your video game as British. To qualify, you must earn 16 points out of a possible 31. The test has four sections.
Cultural content: 16 points
A total of 16 points are available for British or EEA content. This can include UK or EEA settings (real or fictional), UK or EEA citizens or residents, as well as British or EEA subject matter and dialogue.
Cultural contribution: 4 points
A total of 4 points are available for elements of the video game that show British heritage, creativity, and diversity.
Cultural hubs: 3 points
A total of 3 points are available for using video games facilities from the UK. This includes things like conceptual development, storyboarding, programming, design, music recording, audio production, and voice recording.
Personnel: 8 points
A total of 8 points are available for UK and EEA citizens or residents who have key creative roles in developing the video game, such as project leaders, scriptwriters, composers, artists, programmers, and designers
VGTR claims work by reducing your profits or increasing your loss, so that in either case, you’ll have less corporation tax to pay.
This amounts to whichever is the lower of the following:
Where your company is making a loss, some or all of the loss can be used to receive a tax credit rate of 25%.
If that’s as complicated as it sounds, that’s because it is. The amount you can claim will obviously depend very much on your company’s spend, as well as whether it’s making a profit or loss, meaning there is no one-size-fits-all answer to how much you may get. That’s why it’s best to let us prepare your claim for you.
No, not at all. In fact, some games are an instant no, so make sure yours isn’t one of the following before you start applying. These include any games produced for advertising, promotional, or gambling purposes.
What’s more, at least a quarter (25%) of your game’s total core expenditure must come from UK or EEA services for your video game to be eligible for VGTR.
If you’re not sure where your video game falls, we can help you work out your eligibility and maximise your chances of qualifying for video games tax relief.