UK video games tax relief claimed drops 6%

The decline was attributed to fewer high value claims being made in 2022

News by Sophie McEvoy Staff Writer

Published on Aug. 25, 2023

For the first time since its introduction in 2014, the UK has experienced a drop in Video Games Tax Relief.

There were 350 claims made for VGTR in the 2021-22 financial year, totalling £189 million in relief.

According to data from the UK Government's Creative Industries Statistics Commentary, this marks a 6% decline year-on-year.

Trade body TIGA attributes this drop to "a fall in high value claims over £2 million."

Nearly half the claims were small amounts, with 49% being £50,000.

TIGA noted that this represents only 5% of the total amount of relief, with claims over £50,000 accounting for 78% of the total relief.

The trade body added that the number of VGTR claims made has remained steady since the 2016-2017 fiscal year.

"The latest data from the Government show that VGTR is helping medium-sized and larger games studios to create bigger production games," said Dr Richard Wilson, CEO of TIGA.

"VGTR also helps to encourage FDI (Foreign Direct Investment) into the UK, which is important for the growth of the UK games industry, and to generate further employment in the sector."

He continued: "However, it's clear that VGTR is vitally important for many small studios - with 49% of all claims being £50,000 or less. If we want to encourage more small studios to benefit from VGTR and scale up and grow, then we must ensure that the forthcoming Video Games Expenditure Credit, which will replace VGTR, is administratively simple for micro and small studios to access."

A UKIE spokesperson told GamesIndustry.biz: "The UKs video games sector is a great success story which has been helped to grow through targeted tax reliefs such as VGTR. VGTR works, for every £1 put into VGTR the Government gets £1.72 out. The government knows this which is why we can and must go further.

"Government should look at expanding VGTR in real terms, helping to grow the video games sector which already contributes £5.26 billion to the economy every year, supporting 73,000 jobs."

The UK Government introduced Video Games Expenditure Credit earlier this year during the Spring Budget.

VGEC will begin in January next year, with a 34% relief rate compared to the previous rate of 25%.