Is Your Game Eligible for VGEC? A Simple Checklist

Offering up to a quarter of development costs back to video game developers, the Video Games Expenditure Credit (VGEC) is the UK government's new support for homegrown talent, replacing the previous tax relief scheme. VGEC can be claimed on costs incurred from 1 January 2024.

UK-registered companies developing video games are likely to qualify for VGEC. However, there are still some hoops to jump through.

Is your company eligible for VGEC?

The Video Game Development Company (VGDC) is the company responsible for designing, producing and testing the game.

To qualify, you’ll need to answer yes to all the following questions.

• Is your company registered in the UK?
• Do you have responsibility for the design and development of the game?
• Are you actively involved in planning and decision-making for the game?
• Are you responsible for negotiating, contracting and paying for goods, rights and services?

If more than one company meets these requirements, then the company that is “most directly engaged” is considered the VGDC.

Unfortunately, if no company meets the requirements, there is no qualifying VGDC for that game.

Is your game eligible for VGEC?

A video game is “an electronic game played through a video device”. The player should be able to control the events of the game with an uncertain outcome.

For a game to qualify for VGEC, you must answer yes to the following questions.

• Is the game intended for public release?
• Has it been certified as ‘British’ by the British Film Institute?
• Does it meet the content requirements (i.e., no restricted content)?

There are some restrictions on the content of the game. Games designed for advertising, promotional or gambling purposes are ineligible. Games may also not contain any pornographic or extreme material.

Games may contain elements of advertising, but this can’t be their main purpose. For example, a game can include ads alongside a paid, ad-free version but it can’t be rolled out as part of a promotional campaign for another product.

Similarly, games can include in-game gambling, so long as players can’t “cash out”. Prizes can’t be worth any money in the real world. For example, a poker simulator that allows players to win in-game tokens will be eligible, so long as they can’t be exchanged for any money or real-world prizes.

Getting your game certified as ‘British’

One of the key requirements of an eligible game is for it to be certified as ‘British’. This means getting either a final or interim certificate from the British Film Institute (BFI) that shows the game has passed the Cultural Test.

The Cultural Test is points-based and looks at the content and development of the game; you’ll need to achieve 16 of a possible 31 points to pass. The test is divided into four sections:

• Section A - Cultural Content: Up to 16 points available. This section looks at the on-screen representation of the game, focusing on the game’s locations, characters, subject matter and dialogue.
• Section B - Cultural Contribution: Up to 4 points available. This section is based on the video game’s British cultural impact, covering British creativity, heritage, and cultural diversity.
• Section C - Cultural Hubs: Up to 4 points available. This section looks at where the development work took place. If 50% or more of the work (measured by expenditure) took place in the UK or EEA, then points can be gained. You will need to provide an Accountant’s Report for validation.
• Section D - Cultural Practitioners: Up to 8 points available. This section focuses on the key personnel involved in the development. Specifically, it looks at nationality or residency, awarding points for personnel who are citizens of or residing in the UK or EEA. Once again, for points in this section, you will need to submit an Accountant’s Report.

You don’t need to apply for points under each category as long as you qualify for a minimum of 16 points.

What documents will you need?

The actual claim is made through your Corporation Tax Return (CT600) by filling out the appropriate boxes and forms.

However, to pass the BFI Cultural Test, you’ll need some supporting documentation:

• Video game scripts or equivalent to demonstrate language and content in the English language
• Game design documents, treatment or synopsis of the video game
• Development/Production schedule
• Total final cost report
• Chain of title/writers’ agreement/underlying material declaration, etc.
• Scan of a statutory declaration
• Production budget (interim certificate only)
• Accountant’s report (final certificate only, required to validate points in Section C or D)
• Access to the completed version of the game (final certificate only)

From 1 April 2024, all claims must be accompanied by an additional information form (AIF). This must be submitted before the submission of the CT600.

The AIF requires the following information:

• VAT registration number
• PAYE reference number
• Foreign Entertainer’s Unit (FEU) reference number, if applicable
• the project or production name
• the start date of pre-production or active development
• the production status (ongoing, complete, abandoned)
• total expenditure for all productions
• total core costs for all productions
• amount of credit you’re claiming for each relief

You may need to provide details about the additional deduction you’re claiming, the amount of loss surrendered, or any expenses through connected parties.

Outside of the AIF, you must provide:

• a British cultural certificate from the British Film Institute (interim or final)
• statements of the amount of core expenditure, split between UK and non-UK costs
• a breakdown of expenditure by category

You may also wish to provide details of any methods of apportionment and/or assumptions used in producing these figures and any other information relevant to the claim.

You should keep sufficient records of costs incurred. This is not only good accounting practice but important in the event of an enquiry from HMRC. Compliance checks from HMRC have been on the rise in other tax relief incentives in the UK and usually comprise requests for evidence.

Questions? Check out our eBook!

We’ve written a comprehensive guide to all things VGEC, including qualification criteria, calculating your claim and submitting to HMRC. Our eBook is completely free, with detailed answers to all your questions.

Download here

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