Six ways to make the most of Video Games Tax Relief

Does your company develop video games? If so, don’t miss out on potentially thousands of pounds thanks to generous Video Games Tax Relief!

What is Video Games Tax Relief?

Video Games Tax Relief (VGTR) is one of eight different creative sector tax reliefs. Offered as an incentive to innovate, it helps UK companies cover the cost of developing video games. It’s provided as a payable cash tax credit on qualifying R&D expenditure.

As long as your video game is intended for supply to the public - and it passes the British Film Institute’s Cultural Test - then a VGTR claim could well follow. A minimum of 25% of the total “core” expenditure on the video game’s development must also have taken place inside the European Economic Area (EEA).

At Myriad Associates, we have years of experience helping both businesses and accountants with all aspects of VGTR plus a wide range of other R&D tax reliefs. We know what works and what doesn’t when it comes to your VGTR claim.

Top VGTR tips

Take a look at our six top tips to not only make sure your VGTR claim is successful but maximised too:

Start off on the right foot

Right from the start, it’s important to structure your company in the correct way to avoid missing out on certain benefits. By getting in touch and partnering with us, you know you’re getting the best, most-up-date advice before kicking your project off. With the right structure and timely advice it’s much easier to maximise your claim from the outset.

Write clearly and accurately

When you submit your VGTR application, HMRC will need to easily understand all the reasons behind the amount you’re looking to claim. Make sure the documentation and analysis you supply is thorough, but is also laid out in such a way that clearly defines your key areas of expenditure. Make sure you’re not trying to claim for something that is not eligible for VGTR, and that your numbers all add up correctly.

Forgetting something, trying to hide certain details, or not being clear with your language can mean a real problem for the HMRC officer at the other end who has to read it. Not only can this lead to frustration all round, but HMRC could well have further questions which will delay your payment substantially.

Make sure you claim for everything

Although the application process for VGTR is designed to be relatively straight-forward, the devil, as they say, is in the detail. If you manage to miss a question or not quite answer it correctly, then the quality of your application is likely to suffer.

Without a VGTR specialist like the Myriad Associates team to guide you, it's really easy to under-claim and therefore lose out on cash that you could be ploughing back into your company. Essentially, VGTR is not quite the same as R&D Tax Credits, which for video games development is only claimable against staff costs.

It's much more versatile than that, but general accountants have a very broad remit and may not be fully on board with all the relief’s complexities.

Use the services of a VGTR specialist (even if you already have an accountant)

We really can’t emphasis this point enough; using a VGTR tax advisor really can be fundamental to your application’s success. However, this doesn't mean you should give your accountant the elbow in favour of a VGTR specialist - instead, they must work together. As VGTR is a relief, it should be treated as an additional element added on to your normal tax claims and year-end accounts. Specialists at Myriad Associates will deal exclusively with your VGTR claim, leaving your accountant free to deal with everything else. It’s not a case of choosing one or the other.

Get cultural

In order for your company’s activities to be eligible for the VGTR, it must pass the BFI’s Cultural Test and gain a certificate to prove this. There are still many misconceptions surrounding the Cultural Test, but the truth is that if you’re a UK-based company that’s designing a game in the UK, then the test is very difficult to fail.

The checklist works by assigning points based on how the game's creators, content and design fits in with British or European culture. In order to pass, a game must achieve a minimum of 16 points. However, four points are awarded simply because the video game is in English (or another indigenous language like Welsh or Gallic), with another two awarded for performing 50%+ of the conceptual design/programming/storyboarding or development in the UK. So as you can see, picking up the minimum 16 points is relatively easy.

VGTR can be attractive to other investors

Developing video games can be a costly business, and investment is required not just at the beginning of a project but all the way through to testing and beyond.

Whilst VGTR provides a very useful boost when it comes to financing your project, additional external investment will very likely be required at various points along the way. Applying for and receiving VGTR not only offers an essential cash injection, it can make your project much more attractive to potential investors too. Private investors in particular will see that you have your eye on the ball regarding funding streams available, and that your company is serious about making the video game a success.

New Video Game Expenditure Credit.

In 2023 the UK government announced its plan to replace VGTR with a new Video Game Expenditure Credit.  VGTR can only be applied to games in production by 31^st March 2024.  VGTR will close for all productions from 1^st April 2027.  The new VGEC allows qualifying games to claim 34% expenditure credit on qualifying UK production costs on expenditure incurred from 1^st January 2024. Games that previously claimed VGTR may be eligible to opt in for VGEC.

Why Myriad?

Myriad is a leading specialist advisor in UK Video Games Tax Relief with years of experience behind us. We have delivered hundreds of VGTR claims on behalf of a massive range of UK gaming organisations and are proud of our market-leading success record.

With our unique set of VGTR templates and broad expertise, we will support you in achieving the VGTR relief your company deserves.

If you would like a chat with our friendly team, call us on 0207 118 6045 or you can use our contact form and we’ll be pleased to call you back.

Thinking of claiming R&D Tax Credits alongside VGTR? Don’t forget to check out our blog: VGTR or R&D Tax Relief - which should you claim?