Video Games Tax Relief Extended to 2023
Industry officials have welcomed the news that the UK’s Video Games Tax Relief (VGTR) scheme is to be extended until 2023. The programme which was introduced in 2014 was due to expire in April 2018 but the European Commission has now confirmed it has been re-notified until 2023.
This is great news for the UK games sector in the ongoing face of competition from overseas where generous tax benefits are available to video games producers.
TIGA, the network for games developers and digital publishers and the trade association representing the UK video games industry, welcomed the news that Video Games Tax Relief has been successfully re-notified to the European Commission. TIGA has consistently campaigned for VGTR and argued that it is justified on three grounds:
1. It enables the UK video games industry to compete on a more level playing field against overseas competitors who benefit from similar forms of relief
2. It promotes the production of culturally British video games
3. It encourages economic growth
Dr Richard Wilson, TIGA CEO, said:
“Today’s announcement by the EU Commission is excellent news, not just for the video games industry but also for the wider economy. Video Games Tax Relief will continue to promote investment, job creation and business growth in our high technology, high skills, export focused industry.
Ukie, the trade body for the UK’s games and interactive entertainment industry also welcomed the decision. In an article published on its website, the organisation stated it has been working closely with UK government on renotification and shall continue to ensure the UK tax relief scheme remains and is reviewed to ensure its competitiveness compared to other systems, beyond the UK leaving the European Union.
Ukie CEO, Dr Jo Twist OBE said:
“Having confirmation that the VGTR can continue to operate until at least 2023 is fantastic news, and we very much welcome the UK government’s ongoing support for the sector. We look forward to continuing to represent the sector, calling on government to introduce further measures that will help grow the UK’s games industry, particularly around continued access to highly skilled talent post- Brexit.”
Since its introduction in 2014, 295 video games have claimed VGTR; this accounted for £886 million total expenditure and £693 million UK expenditure. In 2016-17 there were 90 video games completed that claimed VGTR, with UK expenditure of £163 million. (Source: HMRC Creative Industries Statistics, July 2017)
About Video Games Tax Relief
VGTR aims to promote the sustainable production of culturally relevant video games in the UK. It is aimed directly at companies producing video games.
A company can claim VGTR if:
– the video game is British
– the video game is intended for supply
– at least 25% of core expenditure is incurred on goods or services that are provided from within the European Economic Area (EEA)
If a company qualifies to claim VGTR it is also entitled to:
– an additional deduction in computing their taxable profits
– surrender losses for a payable tax credit where additional deduction results in a loss
Both the additional deduction and the payable credit are calculated on the basis of EEA core expenditure up to a maximum of 80% of the total core expenditure by the video games company. Core expenditure is spending on designing, producing and testing the game.
If you’re a business in the video games industry you could be claiming Video Games Tax Relief. The experts at R&D Funding Group offer help and advice on accessing this valuable funding. Please contact Stephen Dyson for a free, no-obligation consultation; telephone Stephen on 0161 464 6351 or email sdyson@rdfunding.co.uk.
Sources:
European Commission
TIGA
UKie
HMRC Creative Industries Statistics, July 2017