Video Games Tax Credit claims soar
Current Issues | Creative industries | 15th November 2016
BFI statistics just released confirm a huge increase in the number of games receiving cultural test final certification. Studios with games qualifying for the Video Games Tax Credit (VGTR) can reduce their corporation tax if their game makes a profit, or receive a cash tax credit if their game makes a loss.
BFI video games tax credit statistics
The statistics show:
- In Q1-Q3 2016, 128 video games received final certification with an UK/EEA spend of £141 million and a total budget of £158 million. UK/EEA spend was 89% of total budget.
- In the last 12 months, 167 video games received final certification with an UK/EEA spend £253 million and a total budget of £350 million. UK/EEA spend was 72% of total budget.
|Type of certification||Oct 2014 - Sept 2015||Oct 2015 - Sept 2016|
|EEA/UK spend £m||32.2||253.1|
|Total budget £m||33.9||350.2|
|EEA/UK spend as % of total budget||95.1||72.3|
Source BFI. ‘Total Budget’ is the sum of development activity in the UK and production activity outside the UK.
Industry prospects post-Brexit
The statistics are encouraging, but what are the prospects for the industry following the Brexit vote? Both TIGA, the independent trade association representing the video games industry and Ukie, the trade body for the UK’s games and interactive entertainment industry, have been lobbying the Chancellor of the Exchequer Philip Hammond to help ensure the UK remains a global leader in making games and interactive entertainment. We eagerly await his Autumn Statement on 23 November and will provide our own analysis of what he announces.
Game completion and interim or final certification
One of the areas which often causes difficulty is the decision over when the game development is considered complete and whether to apply for an interim or final certificate. Many games continue to be updated or enhanced after they have been released for sale. The amount of any losses not attributable to the VGTR, and also whether there are any other games in development by the same company, are likely to influence the decision. However, this can become very complicated and it’s not always easy to understand how the guidance issued by BFI and HMRC work together.
Please contact us for further advice on this point.