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= The UK Video Games Tax Relief =

The Video Games Tax Relief (VGTR) was established in 2014 to help support creativity in the UK games industry. Prior to this the UK Games industry was lagging behind other countries where game developers benefitted from substantial tax breaks and government grants. Between 2008 and 2011, employment in the [games industry] fell by over 10 per cent and investment fell by £48 million. . Thus the UK VGTR aims to ensure the UK games industry’s competitiveness on the global stage, promotes investment and job creation and encourage the production of culturally British video games.The key benefit of the tax relief is that qualifying companies can claim up to 20% of their “core expenditure” back, provided that expenditure has been made in the European Economic Area (EEA).

Who can apply?
If you are a games company developing and producing games which can be played on a console, PC, or a ‘smart device’ (i.e. mobile), which are intended to be supplied and played by the general public, and you are claiming for “qualifying expenditure” incurred on or after 1st April 2014, then you can apply.

All games will be assessed by the BFI to ensure that they pass the ‘cultural test’, to ensure that they qualify as ‘British’ under a points-based system. This will be covered in more detail below, but it doesn’t necessarily mean that a game needs to be set in Britain, or feature British characters, or that all of the people who have worked on the game need to be based in the UK.

The tax relief is claimable against qualifying core expenditure – i.e. costs for designing, producing and testing a video game – that has been spent within the European Economic Area. You can even claim for subcontracted costs such as development resources (within the rules, and up to a cap of £1M) but not for external costs such as marketing and advertising.

What is the cultural test?
In order to qualify for the VGTR, games projects need to pass the cultural test, which certifies that they have enough “British” credentials. The cultural test is a points-based test where the project needs 16 of a possible 31 points to pass, based on four elements:


 * Cultural content (up to 16 points) i.e. the setting, subject/themes, lead characters and language
 * Cultural contribution (up to 4 points) i.e. representing British creativity, heritage or diversity
 * Cultural hubs (up to 3 points) i.e. concept development, story boarding, design, programming and soundtrack is created in the UK
 * Cultural practitioners (up to 8 points) Personnel that worked on the game are EEA citizens or residents.

Whilst there is a significant emphasis placed on the content of the game, such as the nationality of lead characters or the setting of the game, points are also awarded for designing and producing the game in the EEA, so UK game developers easily qualify. There’s no need to put Union Jacks and red post boxes in your game to qualify.