VIDEOGAMES
TAXRELIEF
(VGTR)
Whitepaper
AspartofanumberofcreativeindustrytaxreliefschemesimplementedbytheUK
government,VideoGamesTaxReliefallowsgamesdeveloperstoclaimreliefin
respectofexpenditureincurredinthedevelopmentofBritishvideogames.
IfyourVideoGamesDevelopmentCompanycanmeetthe
requirementssetoutbyHMRC,youcanclaimsignificant
additionaldeductionsagainstyourtaxableprofitsor,under
certaincircumstances,claimacashrepaymentfromHMRC.
Reliefisavailablefor‘CoreExpenditure’onthedevelopmentofgameswhichfully
meetcertaincriteria,butascertainingwhetheraprojectqualifiesandwhichexpenses
arereclaimablecanbeacomplextask.
DOESMYVIDEOGAMESDEVELOPMENT
COMPANY(VGDC)QUALIFYFORRELIEF?
Firstly,thegamemustbecertifiedbytheSecretaryofStateas‘British’.Forthe
purposeofthiscertificationtheVGDCmustbe:
IncorporatedasalimitedliabilitycompanywithCompaniesHouseand
registeredforCorporationtax
Theonlydevelopmentcompanyworkingonaparticulargame
Responsiblefordesigning,producingandtestingthevideogame
Activelyengagedinplanninganddecision-makingduringdesign,
productionandanytestingofthevideogame
Directlynegotiate,contractandpayforrights,goodandservices
(Subcontractorsmaybeusedalthough
relatingtothevideogame
thereisalimittothequalifyingpaymentswhichcanbemadetothem)
Thegameitselfmustadditionallypassthe‘CulturalTest’,whichworksonapoints
system.Theassessmentismadeunder2categories;‘CulturalContent’and‘Cultural
Contribution’.Pointsareawardedwhencertainelementsofthegame,andits
developmentteam,aredeemedtobe‘British’andcontributetowardsculturalcreativity,
heritageanddiversity.
Next,thegamemustbeintendedforsupplytothegeneralpublic.
25%
Finally,toqualifyforreliefatleast25%ofthe‘coreexpenditure’onthegamemustbe
incurredongoodsandservicesprovidedfromwithintheEuropeanEconomicArea(EEA).
WHATCONSTITUTES'COREEXPENDITURE'?
Reliefisonlyavailableon‘CoreExpenditure’,whichrelatesspecificallytothedesigning,
producingandtestingofthevideogame.
Costsincurreddevelopingtheinitialconceptofthegame,ormaintaining/debugginga
completedgameareexcludedfromrelief,asareoverheadssuchas:
gaminghardware
accountingfees
insurance
bankinterest
post-completionadvertisingandentertainingexpenses.
Additionally,thereisnoreliefforcostswhichhavealsoqualifiedforresearchand
developmenttaxcredits.SeehereformoreinformationaboutR&DTaxRelief.
TAXRELIEFORTAXCREDIT?
ThereliefisclaimedthroughtheVGDC’scorporationtaxreturn.TheVGDCcanchoose
toreceiveeithertaxreliefontheirallowablecosts,or-wheretheVGDCisloss-making
-apayabletaxcreditfromHMRC.
TAX
CREDIT
TAX
RELIEF
TheamountofreliefthataVGDC
canclaiminitsfirstaccounting
periodisthelowerof80%of
totalcoreexpenditure,orthe
actualEEAcoreexpenditure
incurred.Thisisdeemedthe
‘EnhanceableExpenditure
80%
25%
Paidatarateof25%ofthe
‘surrenderableloss’.The
company's‘surrenderableloss’ina
periodofaccountwillbeitsactual
lossor,iflower,theamountofthe
‘enhanceableexpenditure’forthat
period
HOWCANWEHELP?
VideoGamesTaxReliefoffersagreatopportunityto
reduceyourcorporationtaxbillortogetataxrebate
fromHMRC–butmanydevelopersaren’tdoingso,either
duetounawarenessofthescheme,ornotbeingabletounderstandthecomplexities
ofthequalificationcriteria.
Workingoutwhetheryourvideogamemeetsthequalifyingcriteria,andwhat
elementsofyourexpenditurecanbeclaimedagainstyourcompany’sprofits,is
complicatedandtime-consuming.Professionaladviceisessentialifyouwantto
makethemostofaclaim.
IfyourbusinessislookingtoclaimthroughtheVideoGamesTaxReliefscheme,we
cantellyou:
Whetheryoumeettherequirementsforthescheme.
Whatelementsofyourgamedevelopmentcostsyoucould
claimagainst.
Howtoachieve‘BritishVideoGameCertification’aswellas
theactualapplicationforthecredit.
ContactChaddesleySanfordtoarrangea
callwithourVideoGamestaxspecialist.You
cancalluson02071836088oremailusat
[email protected].