Video Games Tax Relief (VGTR) – A Complete Guide for UK Game Developers
Video Games Tax Relief (VGTR) is a special UK government scheme that helps game developers reduce their tax bills or get cash rebates. If you create video games in the UK, you may be able to claim VGTR and save up to 25% of your development costs.
In this guide, we will explain what VGTR is, how much it is worth, who qualifies, and how to claim it. We will also cover the new Video Games Expenditure Credit (VGEC) and how R&D Tax Relief can further benefit game studios.
What is Video Games Tax Relief (VGTR)?
VGTR is a tax incentive that supports UK video game developers. It allows eligible companies to reduce their corporation tax or receive a cash payment from HMRC. This scheme encourages game studios to invest in the UK gaming industry and remain competitive globally.
To qualify, a game must:
If your game meets these conditions, your company can apply for VGTR and save a significant amount of money.
How Much is VGTR Worth?
VGTR allows UK game companies to claim:
For example, if your game development costs £500,000, you could get:
£100,000 in tax relief or cash payment if eligible.
This support can help small and large studios reduce financial risks and increase investment in future projects.
How VGTR Helps Game Studios
For indie developers, VGTR can make a huge difference by freeing up funds for marketing, hiring, or game expansion.
Which Games Qualify for VGTR?
To qualify, a game must:
✔ Be made for commercial release (not for promotions or gambling).
✔ Pass the BFI Cultural Test (the game must include British characters, locations, or creative input).
✔ Spend at least 25% of production costs in the UK or EEA.
This means games from indie developers to AAA studios can claim VGTR, as long as they meet these conditions.
Which Companies Can Apply for VGTR?
VGTR is available only to UK-based companies that:
If you outsource development but do not own the game, you cannot claim VGTR.
How to Claim VGTR – Step-by-Step Guide
Here’s how to apply for Video Games Tax Relief in the UK:
1. Pass the BFI Cultural Test
Apply to the British Film Institute (BFI) for a cultural certificate to prove your game qualifies.
2. Identify Qualifying Costs
Keep records of staff salaries, software, production expenses, and subcontractor fees.
3. Submit VGTR Claim in Tax Return
Include your VGTR claim in your corporation tax return (CT600) when filing with HMRC.
4. Receive Tax Relief or Cash Rebate
HMRC reviews your claim and pays out tax relief or a cash credit (processing time: 6–12 weeks).
New Video Games Expenditure Credit (VGEC) – Replacing VGTR
The UK government is replacing VGTR with VGEC from April 2025. The new system will:
✔ Base tax relief on a percentage of UK costs instead of deductions.
✔ Only cover UK-based spending (not EEA).
✔ Be more similar to R&D Tax Credits, making it easier to combine.
If you are planning a new game, consider how these changes might impact your tax relief claims.
How to Qualify for Video Games Tax Relief
To maximise your claim:
- Ensure your game meets all VGTR rules.
- Keep detailed financial records of development costs.
- Work with a VGTR specialist or accountant to optimise your claim.
- Submit claims on time to avoid delays.
Planning ahead will help secure the highest possible tax relief for your company.
Eligible Gaming Platforms
VGTR is available for games on:
No matter the platform, your game can qualify if it meets the criteria.
How R&D Tax Relief Can Help Game Developers
In addition to VGTR, many UK game studios also qualify for R&D Tax Relief.
R&D Tax Relief Benefits:
- Covers new technology, AI, physics engines, and game engines.
- Refunds up to 33% of eligible R&D costs.
- Can be claimed alongside VGTR for extra tax savings.
By claiming both VGTR and R&D tax credits, game studios can maximise their funding and increase profits.
Frequently Asked Questions (FAQs)
1. Can I claim VGTR for multiple games?
Yes, you can claim VGTR for every qualifying game your company develops.
2. Can non-UK companies apply for VGTR?
No, only UK-registered companies subject to UK corporation tax can claim VGTR.
3. Can I claim both VGTR and R&D Tax Relief?
Yes, as long as the expenses meet the criteria for both schemes.
4. How long does HMRC take to process VGTR claims?
6–12 weeks, depending on the complexity of the claim.
5. When will VGTR be replaced by VGEC?
VGTR will be phased out in April 2025 and replaced by VGEC.
Video Games Tax Relief (VGTR) is a powerful tax incentive that can help UK game developers save money and grow their business. With the upcoming VGEC changes, it is essential for studios to stay informed and plan ahead.
By combining VGTR with R&D Tax Relief, game studios can maximise their funding and invest in future innovation. If you develop video games in the UK, start your VGTR claim today to boost your studio’s financial success.
Get started your VGTR Tax Claim today by contacting us at RnD Tax Relief.
