Video Game Tax Relief: Raising your Game

The Rules of the Game: what is Video Game Tax Relief (VGTR)?

Video Game Tax Relief, or VGTR, is a way of taking your games development business to a whole new level. If the games you’re working on qualify for the scheme, you could be claiming up to 20% of your eligible costs.

With the UK’s energetic games industry climbing the global leaderboards, British firms are pumping hundreds of millions in qualifying expenditure into their projects each year. Sadly, far too few businesses are claiming the full benefits of their work.

Video Game Tax Relief isn’t a cheat code either. Like other kinds of creative tax relief, VGTR is about powering up one of the country’s most innovative industries.

Who can claim VGTR?

To qualify for game developers’ tax relief, your business has to jump through a few of HMRC’s hoops. To start with, you’ll need to be:

• Registered for UK Corporation Tax.
• Handling the majority of your game’s design, creation and development.
• Spending at least 25% of your game’s core costs inside the European Economic Area (EEA).

How does a game qualify for VGTR?

One of the trickiest challenges of Video Game Tax Relief is working out whether or not your game qualifies for it. HMRC’s rules can be complex, here are the basic checkpoints you’ll have to pass:

• Your game needs to be intended for public release.
• It must be PEGI rateable, and not for purposes such as gambling or advertisement.
• It needs to be certified by the BFI as a British video game.

The BFI Cultural Test is a points-based system with a potential high-score of 31. You’ll receive points based on:

• Your game’s locations, subject, characters and dialogue (up to 16 points).
• Its overall cultural impact (up to 4 points).
• Where you spent the money developing the game (up to 3 points).
• The nationality or residency of your key personnel (up to 8 points).

You won’t need to top the scoreboard in every category to qualify for VGTR, but you’ll need to earn at least 16 points in total.

How much VGTR can I claim?

The Video Game Tax Relief you qualify for depends on how you’re spending your money and your company’s tax position. VGTR is calculated on the lower of:

• 80% of your core costs.
• 100% of what you've spent inside the European Economic Area.

If you’re company is profit making, this can be used to reduce or eliminate your tax bill. Even if your game makes a loss, you can still make a Video Game Tax Relief claim. In that case, you can “surrender” your losses for a 25% tax credit.

Your core expenditure for VGTR only includes the costs of your game’s design, production and testing. You won’t be able to claim any creative tax relief for things like debugging, marketing or maintenance of your game after you’ve released it. Understanding these financial combo-breakers is the key to making a really solid VGTR claim – and that’s where RIFT’s expertise and experience really comes into play.

How can RIFT help me claim VGTR?

We’ll walk you through the scheme, work with you on your BFI certification and submission paperwork until your claim’s paid out. As our Technical VGTR Lead, Oliver Batt, says:

“As a team of long-standing gamers, we are passionate about game development tax relief. Our tax expertise and deep understanding of the VGTR scheme mean we can reward our clients with much-needed tax relief.”

Video Game Tax Relief is a serious financial upgrade for innovative British game developers. Call or email RIFT Tax Credits to give your games the sharpest competitive edge in the business.