UK Government increases tax relief support for video games
But now relief is just on goods and services 'used or consumed' in the UK
The UK Government will replace Video Games Tax Relief with more aggressive support under the name: Video Games Expenditure Credit.
The news came out via today's Spring Budget announcement, which also confirmed the rise of corporation tax to 25% from next month (for companies with over £250,000 in profits).
The new games credit will have a rate of relief of 34% on 80% of ‘qualifying expenditure’, which is up on the previous rate of 25%.
However, expenditure made in the European Economic Area is no longer counted in the relief. Now, qualifying expenditure will be only on goods and services that are ‘used or consumed in the UK’.
To offset this, there is no-longer a cap on subcontracting in the relief. Previously, there was a £1 million per game cap.
The eligibility requirement for the Video Games Expenditure will require a minimum of 10% of expenditure to be used or consumed in the UK.
VGEC will begin from January next year, and to give companies time to adjust there will be a transition period. Titles that are still being developed from the start of April 2025 may continue to claim the existing tax reliefs until April 2027.
“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," said Dr Richard Wilson OBE, the CEO of trade body TIGA.
"TIGA is delighted 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 also very pleased 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.”
An extensive consultation recently took place on the UK video games tax relief, and you can check out the Government’s full response here.
The UK tax relief was first introduced in 2014. The Treasury gave £197m in tax breaks to game studios last year.
A previous version of this story incorrectly stated that the VGTR was introduced in 2012