Video Games Expenditure Credit

Video Games Expenditure Credit (VGEC) was announced in the Spring Budget 2023 to replace the existing Video Games Tax Relief (VGTR) which has been in place since 2014, as mentioned in our previous article.

The new scheme offers a 34% credit on 80% of “qualifying expenditure”. However, it is important to note that this is subject to Corporation Tax, so the effective rate is likely to be around 25.5%, giving a small increase over VGTR. “Qualifying expenditure” is core expenditure “used or consumed” in the UK. The UK government has also elected to scrap the subcontracting limit previously set at £1 million as it seeks to incentivise future innovations in the gaming sector within the UK.

Your company can claim VGEC if:

• the video game is certified as British
• a minimum of 10% of expenditure is “used or consumed” within the UK

The existing VGTR is still available to any games in development before 1 April 2025, allowing relief on qualifying expenditure incurred within the European Economic Area (EEA) until 31 March 2027.

Any new games beginning development after 1 April 2025 must claim VGEC. However, during the transition period, an election to apply for the new VGEC can be made as early as accounting periods commencing 1 January 2024.

If you would like to discuss this in more detail, please contact the EQ Technology team via technology@eqaccountants.co.uk or call one of our offices.