Video Games Tax Relief
Introduced on the 1st April 2014
Your company will be entitled to claim Video Games Tax Relief if:
- the video game is British
- the video game is intended for supply
- at least 25% of core expenditure is incurred on goods or services that are provided from within the European Economic Area (EEA)
If your company qualifies to claim to Video Games Tax Relief your company is also entitled to:
- an additional deduction in computing their taxable profits
- where that additional deduction results in a loss, to surrender losses for a payable tax credit
Both the additional deduction and the payable credit are calculated on the basis of EEA core expenditure up to a maximum of 80% of the total core expenditure by the video games company. Core expenditure is expenditure on pre-development, principal photography and post-development.
Interaction of VGTR and Research and Development Relief
Some video games development companies may be carrying on research and development and or may have claimed Research and Development (R&D) Relief in the past.
It's important to note that where small or medium-sized enterprise (SME) R&D Relief is claimed on a project, that project can’t claim for any other state aid reliefs (including video games tax relief and grants). This means that if a video games development company chooses to claim VGTR any R&D 'bubble' within a project wouldn't qualify for R&D Relief under the SME scheme.
For large companies who carry out R&D and claim under the large scheme, the rules are different. This is because R&D claimed under the large scheme is not state aid, and therefore the 'bubbles' of R&D within a project may be eligible for R&D Relief.
However, the Research and Development Expenditure Credit scheme for large companies is different to the large scheme. Under this scheme the VGDC doesn't have a choice.