Video Games Tax Relief (VGTR) is one of a group of corporate tax reliefs designed to assist companies operating in the creative industries.

Introduced in 2014, VGTR can generate significant Corporation Tax savings for UK game developers. Qualifying companies can claim an additional deduction in calculating taxable profits of up to 80% of the core expenditure incurred in developing the video game. In certain circumstances, the relief can result in cash payments becoming due to the company.

Although the relief is generous, the VGTR legislation is complex and there are numerous conditions that must be satisfied in order for a company to be eligible to claim. In addition, companies also need to consider the potential implications that claiming VGTR might have on the availability of other reliefs and benefits. For example, a company cannot claim both VGTR and R&D Tax Relief in respect of the same expenditure.

Our range of VGTR services includes:

Eligibility assessments

  • Assessing whether the product under development constitutes a qualifying video game for the purposes of VGTR.
  • Determining whether the company qualifies as the Video Games Development Company in respect of the relevant video game.
  • Ensuring that the gateway conditions are satisfied, including assisting with any cultural test application made to the British Film Institute (BFI).

Modelling exercises

  • Analysing the costs incurred in the relevant period to estimate the level of VGTR available.
  • Producing models to demonstrate the level of VGTR/R&D relief available in respect of expenditure incurred, to assist the company in understanding how best to maximise the potential benefit.  

Claim preparation  

  • Determining the date on which the separate trade for VGTR purposes commenced.
  • Calculating the profit or loss of the separate video game trade.
  • Determining the Core/EEA expenditure and calculating the additional deduction available.
  • Where there is a surrenderable loss, calculating this and assisting the company in determining whether this should be surrendered for a cash repayment or, alternatively, utilised in other ways.
  • Incorporating the claim into the relevant Corporation Tax return for submission to HMRC.

Report preparation

  • Preparing a detailed report in support of the VGTR claim, whether to be kept on record in the event of future due diligence exercises or for submission to HMRC.

Claim review

  • Undertaking a desktop review of client-prepared VGTR claims.
  • Reviewing methodologies used to prepare historic claims, whether utilised by the company itself or by another advisor.

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