The UK tax burden on the game industry is set to lessen, as the tax relief rate for British video game companies is upped to 34% from 25% previously.
As part of the Spring 2023 budget, which sets out the government’s budgeting and tax regimes, the new Video Games Expenditure Credit support strategy will replace the previous system of video games tax relief. The key details, as collected by games industry lobbying group TIGA are as follows:
- The Video Games Expenditure Credit will cover the current Video Games Tax Relief and will have a rate of 34%.
- Qualifying expenditure for the Video Games Expenditure Credit will be expenditure on goods and services that are ‘used or consumed in the UK’.
- From April 1st 2025, new games must claim the Video Games Expenditure Credit. Games in development on April 1st 2025 may continue to claim EEA expenditure under the current video games tax relief until April 2027.
- The eligibility requirement for the Video Games Expenditure will require a minimum of 10% of expenditure to be used or consumed in the UK.
- There will be no cap on subcontracting in the Video Games Expenditure Credit.
- The 80% cap on qualifying expenditure will be maintained.
Many groups have been lobbying for greater tax support of the UK games industry for years, TIGA being one who recently put out a statement ahead of the budget once more calling for a new VGIF (Video Game Investment Fund). Although the new changes to tax relief is not the same as their request it will nevertheless be welcome for many UK game companies.
CEO of TIGA Dr Richard Wilson commented “The UK’s game development sector generates annual tax revenues of £1.2 billion for the Treasury and contributes £2.9 billion to UK GDP annually. TIGA is pleased to see the headline rate of 34% for the Video Games Expenditure Credit. TIGA has campaigned for a higher rate of relief for many years and in advance of the 2023 Budget. TIGA is delighted that the video games sector is viewed as ‘critical’ by the Chancellor. We look forward to working with the Government to make the new Video Games Expenditure Credit drive growth in studios, the sector and the wider economy.”
More money, less problems…and even less now
Although the Chancellor’s budget is likely to inspire criticism and praise in equal measure, the increase in video game industry tax relief certainly seems positive for the industry. At a time when the global economy is looking incredibly shaky, reducing the financial burden placed upon the UK’s relatively small but powerful games industry, including mobile, will be a welcome move.