Video Games Tax Relief

Talk to us

To qualify for Video Games Expenditure Credit (VGEC), a project must meet all of the following:

• There must be one Video Games Development Company (VGDC) registered at Companies House and within the UK corporation tax net.
• The game must be intended for commercial supply to the general public.
• It must be certified as a British video game under the BFI Cultural Test or as a qualifying co-production.
• At least 10% of core expenditure must be UK expenditure.

Relief value: Qualifying games can claim a payable credit worth 34% of eligible UK expenditure (calculated on the lower of actual UK spend or 80% of total core spend). There is no overall cap.

Transitional Rules

• Games that began before 1 April 2025 can still claim under the old tax reliefs until 31 March 2027. Read our blog on the transition from VGTR to VGEC
• Games starting on or after 1 April 2025 must use the new VGEC regime.
• From 1 January 2025, qualifying UK VFX expenditure benefits from a 39% credit and exemption from the 80% cap, when making a claim under the new AVEC regime.

Qualifying expenditure for Video Games Expenditure Credit (VGEC) includes core development activities such as:

• Game design, asset creation, production, and software development.
• Directly related costs in pre-production, production, and testing up to delivery of the finished game.

Non-qualifying expenditure includes:

• Initial concept and idea generation before development begins.
• Debugging, updating, and maintenance of the game after completion and commercial release.

Under VGEC, qualifying expenditure attracts a payable credit at 34%, calculated on the lower of 80% of total core spend or the actual UK spend incurred, with no overall cap.

Control and the Video Games Development Company (VGDC)

To qualify for Video Games Expenditure Credit (VGEC), there must be one designated Video Games Development Company (VGDC). This company must:

• Be registered at Companies House and within the UK corporation tax net.
• Be responsible for the game from design through to testing and completion.
• Be in direct control of negotiating and signing contracts for goods, services and staff engaged in the game’s development.
• Retain responsibility for delivering the final game.

UK Expenditure

To qualify, expenditure must relate to goods or services that are used or consumed in the UK during the production of the video game.

Examples of qualifying expenditure:

• Cast and crew working physically in the UK.
• Studio hire, set construction, post-production carried out in the UK.
• UK-based suppliers of goods/services used in the production process.

Examples of ineligible expenditure:

• Finance costs and interest.
• General audit and accountancy fees.
• Entertaining and hospitality.
• Publicity, promotion and distribution.
• Costs not directly part of “core expenditure” (e.g. script options that don’t go into production, maintenance after delivery of a video game).

Cultural Test for Video Games

The cultural test for British video games is administered by the British Film Institute (BFI) on behalf of the UK government. Its purpose is to apply objective criteria to assess a game’s cultural attributes and determine whether it qualifies as a “British video game.”

The test is points-based (out of 31, with a pass mark of 16) and awards points in four categories:

• Cultural content – the setting, lead characters, subject matter and dialogue.
• Cultural contribution – the game’s reflection of British creativity, heritage, or diversity.
• Cultural hubs – the location of design, programming, and post-production work.
• Cultural practitioners – the nationality or residency of key creatives and development staff.