Figures released by the BFI show the sustained benefit games tax relief has had for the UK economy, which came into effect on 1 April 2014. Find out what it means for game developers in the UK, and how you may have to be game-changing to get it.
Games tax relief, which effectively reduces of the cost of games development, has supported the creation of 167 new games in the last year, with budgets totalling £350.2 million, a ten-fold increase on the previous year (£33.9 million).
Video games tax relief is for UK companies that develop video games, whether physical content or download-only, and is broadly based on existing tax reliefs available for other creative industries, such as film, high-end TV programmes and animations.
Understanding games tax relief
Tax relief is only available in relation to core expenditure. This means expenditure
on designing, producing and testing the video game. In broad terms, the video games development company may claim an additional tax deduction, based on its qualifying expenditure on the relevant video game.
What is the relief worth?
In very broad terms, companies may attract an additional tax deduction of 80% of their production costs. If we assume a 20% tax rate, this equates to additional tax relief of up to 16% of qualifying expenditure. For loss making companies claiming credit relief, the benefit could be up to 20% of the qualifying expenditure.