On the 9th Day of Christmas the Taxman Gave to Me … Video Games Tax Relief- Whee-hee!
For many people both children and adults, video games will be top of their wish list for Santa this Christmas, whether that’s FIFA Football, Call of Duty or a smaller ‘indie’ game from one of the hundreds of small games studies. This year for the first time, video game developers in the UK have had their wish fulfilled and can now get extra tax relief or tax credits from HMRC.
Who can qualify?
Video Games Tax Relief (VGTR) only came in from 1 April 2014, so only expenditure after this date will qualify for the relief, and as with other similar reliefs, you have to be a company to be able to make the claim. Also:
- The game must be British
- It must be intended for sale
- At least 25% of the expenditure must be incurred on goods or services provided within the EEA(basically the EU plus a few other European countries)
To qualify as British, the game must pass a cultural test. This is a points based test where a video game would need to get a certain number of points to qualify – points are awarded for things like:
- Set in a British location
- Characters are British
- British theme or subject matter
- Dialogue language is British (or one of 6 other minority languages indigenous to the UK – well done if you work out all of these!)
- A certain proportion of work, project leaders, scriptwriters and other important figures in the games development are based in the UK
To be able to claim VGTR, a company must apply for certification from the British Film Institute that the game passes the cultural test. Without this certificate a company will not be able to claim the tax relief.
What do you get?
Companies can claim 80% of their expenditure on the game development (or the proportion of expenditure within the EEA if this is less) as qualifying expenditure. This qualifying expenditure gets an extra 100% corporation tax relief, or if the company is loss making it can get 25% of the qualifying expenditure paid to it as a tax credit.
Video Games Tax Relief is a really generous new tax relief that potentially applies to all companies making video games in the UK, whether they are a large game studio developing the next big hit for the Playstation 4, or a one person company developing a small game for a mobile phone or tablet.
So while you are enjoying your new computer game this Christmas, be glad that the video games developers are now getting a Christmas present too, as this tax credit will help more great computer games be developed in Britain.
If you think you could make a claim and want to discuss this further, contact our Preston office on 01772 821021.
Tune in tomorrow for more Christmas tax relief.