How can tax schemes help put players on the map?

Funding remains a major challenge for game studios, but SEIS and EIS offer tax reliefs that attract investors and support growth. Here’s how these schemes can help your studio secure investment.

I was fortunate enough to have attended the last Guildford Games Awards (November 2024) and the general mood was a truly unique mix of celebration and tribulation. The attendees were visibly thrilled with their achievements during the year and not a little thankful to still be standing.

2024 had clearly been a tough year for video games development. Across the industry, studios had been cutting staff or closing down entirely, it was increasingly difficult to make new games stand out among the many offerings hitting the market, and funding was one of the hardest challenges of all.

We cannot help with identifying the next breakout title and I cannot currently code my way out of a cardboard box, but we may have a couple of suggestions for the funding issue. Below I describe a few tax tools that were intended to help encourage investment in early-stage and growing businesses, which may just be perfect for games studios – Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS).

These two schemes offer significant tax reliefs to investors buying shares in the company, making them attractive investments to undertake and reducing the risk associated with investing in the early stages.

SEIS

This is for the very early-stage of the journey, e.g. start-ups, due to restrictions on company size and trading. The company must:

• Be younger than 2 years old
• Have assets below £350,000 at the time of receiving the investment
• Have fewer than 25 full-time employees
• Be a sole company

In return, HMRC allows the investors to:

• Invest up to £200,000 per year*
• immediately take 50% of their investment amount as income tax relief
• sell the shares in the future free of capital gains tax (after 3 years)
• relieve CGT on other sales by re-investing up to £100,000 in SEIS shares

EIS

As the studio grows, this scheme allows for bigger investment in bigger companies.

The company must:

• Have the objective to grow and develop its trade, with a significant risk of failure
• Be younger than 7 years old (or 10 if “knowledge intensive”)
• Have assets below £15m at the time of receiving the investment
• Have fewer than 250 full-time employees (or 500 if “knowledge intensive”)
• Use the money raised on its trade within two years

The company may receive up to £5m in EIS funding per year (£10m if “knowledge intensive”) and may have subsidiary companies.

In return, HMRC allows the investors to:

• Invest up to £1,000,000 per year*
• immediately take 30% of their investment amount as income tax relief
• Sell the shares in the future free of capital gains tax (after 3 years)
• Defer CGT on other sales by re-investing in EIS shares

So offering these schemes can secure funding at an earlier stage and can attract quality investors. The company must continue to meet the conditions so the investors may access their benefits.

There are various administrative requirements to ensure the scheme qualifies in HMRC’s eyes and we are happy to help with:

• Advance assurance – agreeing with HMRC in advance that the scheme will qualify
• Declaration – 3 months after the investment the company declares its continued eligibility
• Issue of SEIS/EIS certificates to investors – these allow the investors to claim their reliefs

For company tax relief schemes: Tax relief on the development of Video Games. Are you aware of the changes?

*it is possible to invest more in certain circumstances.

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