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Video Games Expenditure Credits for Corporation Tax

Taylor Keeble
Mar 25
2 min read

From 1 January 2024, companies can claim Corporation Tax relief under the Video Games Expenditure Credit (VGEC) for qualifying expenditure. This new relief replaces the pre-existing Video Games Tax Relief (VGTR), which will be phased out by April 2027. VGEC is designed to support the UK’s innovative and creative industries.

Eligibility Criteria

A company can claim VGEC for a video game if it meets the following conditions:

The game is certified as British by the British Film Institute (BFI).
It is intended for supply to the general public.
At least 10% of the core costs are related to UK-based activities, including design, production, and testing.
The company is directly responsible for designing, producing, and testing the game.
The company is actively engaged in planning and decision-making.
The company directly negotiates, contracts, and pays for rights, goods, and services.
Games developed for advertising, promotional purposes, or gambling do not qualify for the relief.

Claimable Amount

A company can claim an expenditure credit at a rate of 34% of qualifying expenditure. Qualifying expenditure is the lower of:

80% of the total core costs, or
The total UK core costs.

A key distinction between VGTR and VGEC is that under VGTR, eligible core expenditure included costs incurred within the European Economic Area (EEA). Under VGEC, only UK core costs qualify.

Core Costs

The core costs eligible for VGEC remain the same as those under VGTR, covering expenses related to designing, producing, and testing the video game. However, at least 10% of total core costs must be spent on goods and services provided within the UK.

Claim Period

A company can submit a VGEC claim within two years from the end of the accounting period to which the claim relates. From 1 April 2024, all claims must be accompanied by an Additional Information Form, providing the necessary evidence to support the claim.