Video Games Tax Relief & Video Games Expenditure Credit

Supporting Innovation in UK Game Development

For years, Video Games Tax Relief (VGTR) has been a cornerstone for the UK video games sector - driving growth, attracting investment, and supporting job creation across the industry.

With countries such as France, Germany and Ireland offering more generous tax incentives, the UK Government has responded by reforming VGTR to maintain competitiveness.

As part of Spring Budget 2023, the Government announced that VGTR will be phased out and replaced with the Video Games Expenditure Credit (VGEC). VGEC has been available for companies to claim from 1 January 2024. While it offers slightly more generous relief, it introduces new rules and considerations that could impact studios differently depending on their structure and development plans.

Our specialist Games Tax team can help you navigate the complexities and ensure that your studio is claiming the correct relief during the sunset period for VGTR, which runs to 31 March 2027.

VGTR and VGEC are designed to support and enhance the great game development work taking place across the UK.  Despite this, the rules can be complex and the sunset period during which either relief may be available only adds to this complexity.  Make sure that you don’t miss out by taking proactive advice in this area.

How we can help

We provide expert guidance to help you determine the most beneficial relief for your development projects. Key considerations include:

• Relief eligibility based on development start date - if development of the game started before 1 April 2025, you will have an option of which relief to claim.
• Nature and scale of development costs - if your project involves significant subcontractor costs (e.g., exceeding £1 million), VGEC may offer greater relief, provided those costs qualify as UK expenditure.
• Connected party transactions - we offer support with the complex rules concerning connected party transactions and can bring in our Transfer Pricing specialists where needed.
• Relief modelling and structuring - we help you model potential relief under different scenarios, enabling you to proactively structure your development team, outsourcing arrangements, and cash flow planning.

Additional claim support

Whether you're claiming under VGTR or VGEC, our team can offer support throughout the claim process:

• Eligibility confirmation - ensuring gateway conditions are met, including assistance with the BFI cultural test application and the accountant’s report (if required).
• Trade profit/loss calculations - determining the profit or loss of the separate video game trade for the relevant period.
• Relief calculations - calculating additional deductions or expenditure credits, considering core and UK/EEA expenditure. We also advise on the optimal use of surrender-able losses.
• Corporation Tax integration - incorporating the claim into your Corporation Tax computation and return for the period.
• Additional Information Form preparation - completing the mandatory form for all VGTR/VGEC claims submitted on or after 1 April 2024.
• Supporting documentation - preparing detailed working papers to reconcile claimed costs with your financial statements.
• Cross-disciplinary collaboration - liaising with our Corporation Tax and Financial Reporting Advisory teams to ensure your company claims the full relief it is entitled to.

Get in touch

VGTR and VGEC are designed to support and enhance the incredible work being done by UK game developers. Despite this, the rules can be complex, and the sunset period adds further challenges. Make sure that you don’t miss out by taking proactive advice in this area.

If you would like to learn more on how our expert team can help support your studio, please do not hesitate to reach out to a member of our team or complete our short enquiry form.