In order to qualify for this relief, a company must be actively engaged in developing the game and the production, testing and negotiating of rights. There can be only one development company for each game. In some cases, the company may also qualify for relief under the research and development rules and where this is the case, the benefits of each relief to the company must be evaluated to ensure the most advantageous claim is made.

Profits and losses for each game a company produces must be separately calculated therefore income and costs are must be recorded separately.

Video games tax relief takes two forms being an additional deduction of 100% of the qualifying core expenditure and tax credit of 25% of the surrenderable losses. The relief applies to accounting periods commencing on or after 1st April 2014.

A video game qualifies for relief if it meets the following three criteria:

  • At least 25% of the core expenditure is EEA expenditure.
  • It is intended for supply to the general public at the outset.
  • Is certified as a British video game.


Core expenditure covers costs involved in the design, producing and testing of the game but not subsequent debugging of the completed game and maintenance.

In order to qualify for video games tax relief, a game must be certified by the Secretary of State as a “British video game” by passing a cultural test.

The video games development company may apply to the Secretary of State for either an interim certificate (granted before the game is completed), or a final certificate (granted after the game is completed).

The government has introduced a points-based cultural test, which came into force on 19 August 2014, to determine whether a video game may be certified as a “British video game”. Points under the test are awarded on the basis of the setting, content, language and British cultural aspects of the game, where certain work on the game is carried out, and the residence or nationality of the personnel involved in the making of the video game.

Broadly a video game passes the cultural test if it is awarded 16 points. Points are awarded as follows:

(a)     Up to 4 points depending on the percentage of the video game that is set in the United Kingdom or another EEA state.

(b)     Up to 4 points depending on the number of the characters depicted in the video game that are from the United Kingdom or another EEA state.  

(c)     4 points if the video game depicts a British story or a story which relates to another EEA state.  

(d)     Up to 4 points depending on the percentage of the original dialogue that is recorded in the English language or a recognised regional or minority language.  

(e)     Up to 4 points will be awarded in respect of the contribution of the video game to the promotion, development and enhancement of British culture.  

(f)     Up to 3 points will be awarded in respect of certain work carried out in the UK in the making of the video game, provided the work is not insignificant.  

(g)     Up to 8 points will be awarded in respect of specified personnel involved in the making of the video game who are a national of, or a person ordinarily resident in, an EEA state.

If the video game is awarded 4 points under (d), 3 points under (f), or 8 points under (g) it will not pass the cultural test unless it is awarded at least 2 points under (a) or (b), or 4 points under (c). There are criteria for determining whether points should be awarded in certain instances if the location where the video is set or where a character is from are undetermined. Where an application for final certification seeks the award of points under (f) or (g) above an auditor’s report will be required regarding the expenditure on work and the nationality or ordinary residence of personnel.

We shall be pleased to assist you in ensuring that you qualify for the reliefs and making the claims on your behalf.