Video Games Tax Relief is not always easy to understand, which is why we've put together an in-depth guide to making a VGTR claim and passing the cultural test.
VGTR is a simple way for studios to reduce the monetary risk they take when developing a game in the UK or the EEA, as it offers a rebate against production spend.
Our guide is in three parts. If you first want to read an introduction to video games tax relief, head to the VGTR hub page, where you will also find the full table of contents. You can also choose to jump back to the first part, What you need to know about VGTR and the certification process, or to the conclusion, How to make the VGTR claim.
Here's what you will find on this page, which is dedicated to applying for and passing the Video Games Tax Relief cultural test:
- What is the cultural test for video games?
- What are the different sections of the cultural test and how do they work?
- Will I have to change my game to pass the cultural test?
What is the cultural test for video games?
The cultural test part of the certification process has one goal: to determine whether your game qualifies as British. Without this, you can't make a VGTR claim.
But "qualifying as British" doesn't mean what you may think -- you can qualify as British even if your game isn't set in the UK, and has no characters in it. The cultural test is about British creativity; it's about where the work is taking place and who's making it.
"The cultural test basically suggests that the product that you're making, the content that you're creating, and the people making it qualify against a set of fixed criteria," says Tim Scott, Ukie's head of policy and public affairs.
"Now, it sounds a little bit daunting when people first look at it and it leads to a lot of confusion. The confusion fits in with: 'Does that mean that I have to include characters in pinstripe suits and bowler hats and have lots of red telephone boxes in my game because that's what's culturally British, right?' And you'd be amazed at how many people still think that's the case. The reality is quite removed from it."
The cultural test is only "one sheet of A4 paper," Scott points out, split into four sections (cultural content, contribution and hubs, as well as personnel, see below for more details).
"Read it and think about how your title might fit against the criteria that it's looking at," Scott adds. "And do that at the beginning because you will probably be pleasantly surprised."
You only need to get 16 points out of a possible 31 to pass, and the test has been designed so it takes into account the breadth of games content out there. Scott takes stop-frame animation series The Clangers as an example to explain the cultural test's flexibility -- it's not a game, but it still works.
"The Clangers are aliens. They don't speak English, they speak gobbledygook. And they don't live in the UK or the EEA, they live on the moon. So how could that subject matter pass as culturally British? The test was built to take into account those aspects of creative storytelling."
Another example would be No Man's Sky, which the BFI has chosen as the cultural test's poster child on its leaflet. Hello Games' hit debut is not set on Earth and its characters are of undetermined origin, and yet it qualified as British and benefited from VGTR.
What are the different sections of the cultural test and how do they work?
The way the cultural test works means you don't have to follow the order of the sections to claim points -- as Scott highlights, it's "a sort of first-past-the-post system." As we have already touched upon, projects need to achieve 16 points to pass and these points can come from any of the four sections:
- Section A - Cultural content (up to 16 points)
- Section B - Cultural contribution (up to four points)
- Section C - Cultural hubs (up to three points)
- Section D - Personnel (up to eight points)
Anna Mansi, head of certification at the BFI, details an example to clarify how it works.
"Potentially you could have a game that's set in Australia, for example, with Australian characters, so you won't get the points in A1 [Set in the UK or an EEA state] or A2 [Lead characters British or EEA citizens or residents]," she says. "But A3 is about: is it a British or European story, or is the underlying material by a British or European citizen or resident?
"The example I always use is: you want to make a game about West Side Story. The underlying material is Romeo and Juliet by William Shakespeare. So you'd get the four points for the underlying material.
"This could be about original literary origins, but also many of our comic books, graphic novels are being made into films. A lot of those graphic novels are written and illustrated by UK talent. However, a British game developer may want to set it in Australia for some reason. It's their concept and it's their idea [so they'll get points for having British underlying material]."
A3 gives either four points or no points and it is quite straightforward to determine if a game can qualify. Then, A4 gives up to four points for "original dialogue recorded mainly in English language or one of six UK indigenous languages," but once again it's not as strict as it sounds.
"In terms of language, it's quite accessible -- it's not just dialogue," Mansi says. "If you have a puzzle game where you're not necessarily going to have a character speaking, it's all the text-based instructions. So you're already looking at eight points [in section A] here."
"Yes, it's a bit bureaucratic, but we have to operate a robust system"
Anna Mansi, BFI
You can get up to four points in section B if your game "represents/reflects British creativity, British heritage or diversity." Mansi is an advocate for more diversity in the industry -- she believes this aspect of the cultural test is crucial to encouraging developers to depict diversity on-screen. And the following sections are even more flexible.
"In section C, you get points for where the work is done, and you only need to have undertaken 50% to qualify in one of these categories," she says.
Specifically, at least 50% of the conceptual development or storyboarding or programming or design has to take place in the UK (C1), or at least 50% of the music recording or audio production or voice recording has to take place in the UK (C2).
"So, if you're working in the UK, you're doing all of this, and you can get up to three points. And with these eight points [in section A], that takes you up to 11 points. And then in section D, you get a point for every category."
Section D focuses on your team, with points given for each member of your team being EEA citizens or residents.
"If you're a small company and it's just the three of you and you are both the lead artist and the project leader, you get multiple points. If you're just a small indie developer in the UK, you're pretty much going to get eight points, taking you well over the 16 pass mark."
If you do claim points in sections C and D, you need an accountant's report at the final application stage to verify you're actually entitled to them.
"We will always encourage people to go for points in section A and B because they won't have to incur additional costs," Mansi adds. "You need 16 points to pass, so it's trying to make it as least onerous as possible. Yes, it's a bit bureaucratic, but this is government legislation and we have to operate a robust system."
Will I have to change my game to pass the cultural test?
If you've read this far and are still worried about passing the cultural test, Roll7 production and finance director Tom Hegarty has reassuring words for you.
"I probably expected the cultural test side of things to be more complex," he says. "But that was actually okay. You have to show what the game is doing to meet the targets. For a couple of our games we had to use sections C and D. That means you have to use an accountant, so there's probably more paperwork on that side, but we expected accountancy work to make sure we had everything set up."
When asked if he feels that having to pass that cultural test had an impact on the development of Roll7's games at all, Hegarty's answer is unquestionable.
"It didn't, no. When we first did it we actually had a couple of different games that went through it and one passed purely on cultural [content and contribution]. So you don't have to -- and shouldn't -- be refactoring your games to account for [the cultural test].
"If you are developing games within the UK, I think it would have to be something very specific to not pass. We do like to reference British things in terms of our humour and stories and so on. But because of the way we work and where we're based, we find that our games just pass the cultural tests."
Mansi encourages anyone with lingering doubts to get in touch with the BFI (contact details can be found at the bottom of this page).
"Don't try and assess yourself and assume that you can't pass the test -- we're here to help," she says. "Don't worry about the setting and character, come and get in touch with us."
Our VGTR guide is in three parts. If you first want to read an introduction to Video Games Tax Relief, head back to the VGTR hub page, where you will also find the full table of contents. You can also choose to jump back to the first part, What you need to know about VGTR and the certification process, or to the conclusion, How to make the VGTR claim.