Video Game Tax Credits

Adsum can help you with your video game tax credit. We take care of calculating it, submitting it, dealing with HMRC and recovering the video game tax credit for you. PLUS, we can advance you the video game tax credit the same day if needed.

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, we’ll help you see if you’re eligible for VGTR and unlock valuable extra funding.

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“Thankfully, we came across Adsum’s Creative Tax Credits loan. We were able to get the money within 48 hours and the best thing was we didn’t have to worry about repayment as it came directly from HMRC.”
HOW CREATIVE TAX CREDITS HELPED A NEW VIDEO GAME DEVELOPMENT COMPANY

What are video game tax credits?

VGTR is intended to provide a much-needed tax rebate for the costs spent designing, producing, and testing video games.

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.

If your video game production company meets all the below criteria, then start your video game tax relief claim with Adsum today.

Who can access video game tax credits?

1. Your business must be…
Your business must be a Video Games Development Company (VGDC). If you’re making a video game and looking into claiming VGTR, though, it’s likely this will be the case.
2. Your company must also…
Your company must also:

• Be a UK corporation or a permanent UK establishment (basically a UK corporation tax payer)

• Be actively engaged in planning and decision-making

• Directly negotiate, contract and pay for rights, goods and service
3. 25% of the costs arising from…
25% of the costs arising from designing, producing, and testing the video game must come from UK or European Economic Area (EEA) services.
4. Where two or more qualifying VGDCs are involved…
Where two or more qualifying VGDCs are involved in a video game production, only one will be eligible for video games tax relief, designed to prevent abuse of the system. This essentially boils down to whichever company is most involved in the qualifying conditions already outlined above.
5. Your video game must…
Your video game must be certified as British by the BFI (British Film Institute) and aim to be supplied to the general public. This means you have to apply for a certificate under the Cultural Test Regulations. You can be granted a certificate for both finished projects and projects in progress.
6. Some games are an instant no…
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.

How much are video game tax credits worth?

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:

  • 80% of total core expenditure
  • The core expenditure total for goods or services provided from the UK and EEA

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.

How do you get your video game certified as British?

The BFI cultural test is a points-based test used to classify your video game as British. The Adsum team can help you apply for this certification.

To qualify, you must earn 16 points out of a possible 31. The test has four sections. The points are broken down and awarded as follows:

Summary of points

Cultural content: 16 points
Cultural contribution: 4 points
Cultural hubs: 3 points
Personnel: 8 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.

A total of 4 points are available for elements of the video game that show British heritage, creativity, and diversity.

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.

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.