Video games tax relief ― the separate video game trade

By Tolley
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The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Video games tax relief ― the separate video game trade
  • Introduction
  • The separate video game trade
  • Calculating the profits and losses of the separate trade
  • Obtaining the relevant information

Introduction

This guidance note supplements the Video games tax relief ― key provisions guidance note which sets out the main conditions to be satisfied in order to qualify for relief. The legislation relating to video games tax relief (VGTR) was introduced in Finance Act 2013 and is contained in CTA 2009, Part 15B. Following an in-depth investigation by the European Commission to determine whether the development of video games in the UK requires support in the form of tax incentives, it concluded that the relief is compatible with EU State Aid rules in March 2014. The relief came into effect from 1 April 2014.

The separate video game trade

There are several conditions that must be satisfied in order to make a claim for VGTR, such as:

  • the development must relate to a qualifying video game
  • there must be a qualifying video game development company
  • relevant development activities must be carried out
  • relevant expenditure must be incurred

These criteria are explained in more detail in the Video games tax relief ― key provisions guidance note.

The company’s activities in relation to the video game are treated as separate from any other activity for VGTR purposes. The video game trade is treated as commencing when the design of the video game begins or, if earlier, when any income from the video game is received. Provided all the qualifying criteria are met, a claim for VGTR may be made in order to obtain an additional corporation tax deduction in calculating the profits or losses of the separate video game trade.

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