What do I need to know about Video Games Expenditure Credit (VGEC)?
Video Games Expenditure Credit (VGEC) is a new tax relief scheme introduced to support the video game development industry in the UK. VGEC is available for expenditure incurred from 1 January 2024 and offers a higher rate of relief compared to VGTR. VGTR is being replaced by VGEC, however, VGTR can still be claimed up until 31 March 2027 for games which were started (and incurring expenditure) prior to 1 April 2025. The scheme is closed from 1 April 2027.
Am I eligible to claim VGEC?
You must…
- Be responsible for designing, producing, and testing the video game.
- Spend at least 10% of its core costs on activities within the UK.
- Be a company. Partnerships, LLPs, and individuals are not eligible to claim.
- Be subject to UK Corporation Tax.
- Pass a cultural test managed by the British Film Institute (BFI), certifying the game as British-produced. Games created solely for advertisement, promotion, or gambling purposes are excluded.
Qualifying Costs
Core costs eligible for VGEC include expenses related to designing, producing, and testing the game, such as salaries, animation and audio costs, and payments to third-party contractors. These costs must be incurred within the UK.
Claiming the Relief
Companies can claim VGEC through the Corporation Tax system. The relief allows for an expenditure credit at a rate of up to 34% of qualifying expenditure. Qualifying expenditure will be the lower of either 80% of total core costs or the amount of UK core costs.
The process of claiming VGEC involves the following steps:
- Apply to the BFI for an interim cultural certificate, which confirms that your game meets British criteria before it’s completed. This allows you to start claiming relief as you go.
- Once your game is finished, get a final certificate from the BFI and incorporate the VGEC claim into your company tax return. HMRC will then either reduce your corporation tax bill or, if you’re loss-making, send you a cash payment.
And what is the impact of VGEC on the gaming industry?
VGEC is expected to further support the UK video game industry by providing higher relief rates, fostering innovation, and enhancing the sector’s growth and international competitiveness.
How can Price Bailey support you?
Price Bailey are experts in the gaming industry and can provide cross-departmental advice to offer you accurate, efficient guidance.
Contact us today to learn how we can support your journey with expert advice on business planning, tax relief, and funding. More information on the services we offer to the gaming industry can be found here.
We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.
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