Tax relief for video games
development
From 1 April 2014, a new tax relief in the form of an additional tax deduction or repayable tax credit is
available for UK companies who develop video games. The aim of the relief is to further develop the UK's
position as a significant technology centre in Europe. Given the value of the relief, video game developers
should obtain appropriate advice to ensure their claims are maximised.
Who can apply for the relief?
Key points:
The relief is available to video games development companies. There
• The company and game must meet various
can only be one video games development company in relation to a
qualifying conditions
video game, although each development company may be developing
• Relief is given by way of an additional tax deduction;
a number of games. If there is more than one company which could
a payable tax credit may be available where a loss
be the video games development company, then the one most directly
arises
engaged in the qualifying activities would be the video games
• Video games tax relief and R&D relief cannot both
development company for that game.
be claimed In respect of the same expenditure
Please note that video games tax relief and R&D relief cannot both
•
be claimed in respect of the same expenditure.
surrenderable loss). The company's surrenderable loss is the lower
This relief applies to video games across all mediums, be they
of:
physical content or download-only.
 the company's available loss for the period in the separate video
game trade, and
Are there other qualifying conditions?
 the available qualifying expenditure for the period.
To qualify, each video game must pass a points based cultural test by
obtaining a score of at least 16 out of a possible 31 points. This is
Please note that there are complex rules around the use of losses.
judged by the British Film Institute. Furthermore, at least 25% of the and careful consideration is needed as to the use of any losses
core expenditure on the game incurred by the company must be
arising.
European economic area (EEA) expenditure.
Core expenditure relates to the design, production and testing of
How can we help?
video games.
We have extensive experience of providing advisory services to the
What is the value of the relief?
The relief will be effective for expenditure incurred on or after
1 April 2014. Where an accounting period straddles this date, a just
and reasonable apportionment would be required.
The company may claim an additional tax deduction calculated as
100% of the lower of:
 core expenditure incurred in the EEA in relation to that video
game, and
 80% of core expenditure incurred in relation to that video game
Where a loss arises, the company may be able to opt for a 25%
payable tax credit for an accounting period (in which it has a
games sector. We are therefore perfectly placed to advise on the
mechanics of the relief, whether a company or specific game is
likely to qualify for the relief, as well as assisting with the
preparation and submission of any claim.
Contact one of our experts for further information:
Matthew Appleton
Senior Manager
T +44 (0)20 7728 2956
E [email protected]
Issued: May 2014