Creative Industry Tax Relief or Cashback for Video Games

Posted on: 10/05/2018

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Good news for Dorset’s burgeoning digital sector reports Rob Sowden of consultancy Business Cash Enabler.

“Companies that develop video games in the UK are able to make tax savings/receive cash refunds on their corporation tax bill through the Video Games Tax Relief (VGTR) scheme.

“The VGTR is a government scheme which offers generous tax relief tailored specifically to UK video game developers.  For the company to qualify, the Video Game must be an electronic game that is played through a video device.

“The electronic game will include the software and other electronically stored content and information, such as audio content and sound effects.  It does not include the hardware it is played on.

“The Video Game must have sufficient capacity for a player to directly control actions and events.  There must be a certain outcome for the product to be a Game, where the players actions have a meaningful result in the outcome.  The Video Game must be capable of producing two or three dimensional moving images on devices such as televisions, mobile phones, tablets, and handheld portable gaming machines.

“This is a great opportunity to obtain relief on qualifying development expenditure incurred after 1 April 2014, in the form of an additional tax deduction.  The additional deduction is currently 80% of the total expenditure.  If a company made a loss in the qualifying accounting period, it can surrender this loss for a payable Video Game tax credit, which is paid at a rate of 25%.

Key qualifying conditions for VGTR are:

• The company must be registered for corporation tax in the UK
• The company is directly involved in the production, development and testing of the Video Game
• The Video Game must pass a ‘Cultural Test’ to certify that the Game is predominantly British.  Qualification and Certification is administered by the British Film Institute (BFI)
• Be the only company that is making a VGTR claim for that particular Game
• Is intended to be sold and not produced for advertising, promotional purposes or gambling
• Have spent at least 25% of the core costs inside the EEA

About Business Cash Enabler

Dorset-based consultancy Business Cash Enabler provides a free eligibility checking service to help businesses know if they may claim entitlement under various government schemes that can produce Cashback, Tax Relief, Tax Credits or Rebates.