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HMRC internal manual

Video Games Development Company Manual

Claims: how relief is claimed

Video Games Tax Relief (VGTR) is a Corporation Tax relief. It is claimed for each relevant accounting period by completing the appropriate section in the Video Games Development Company’s (VGDC’s) Corporation Tax self-assessment submission (CT600). It is included in the relevant section `Information about enhanced expenditure’ and required supplementary information should be included in the VGDC’s accounts and computations.

The tax return must be accompanied by either an interim or final certificate, as the case may be, from the Department for Culture, Media & Sport that the video game is British (VGDC40030).

Additional deduction

The VGDC should indicate that it is claiming VGTR by completing the relevant boxes in the CT 600. The relevant boxes to complete vary depending on the version of CT return being used. These are set out below

Description                        CT600    Version 2\*          Version 3\*

Tax due                                                         86                          525

Creative tax credit                                          _                            540

Amount claimed                                             87                          545

Amount payable                                             89                          570

Creative enhanced expenditure                       _                           665

Film/Creative tax relief                                  167                         n/a

Enhanced expenditure                                  101                         670

Payable  creative tax credit                            168                         885



A VGDC incurs total expenditure of £450k on a British video game. Of this expenditure, £400k is core expenditure. £300k (75%) of that core expenditure is incurred in the United Kingdom, and £100k (25%) elsewhere. The company is entitled to the following deductions:

  • £450k `ordinary’ deduction, plus
  • £300k additional deduction (the core EEA expenditure is less than 80% of £400k, so it all qualifies (VGDC55020)).

Giving a total deduction of £750k.

The figure that should be entered in box 101 (the `enhanced expenditure figure’ referred to in the Note to box 101) is £300k.

Payable tax credit

If the company is claiming any payable tax credit, then it should enter the amount in the relevant boxes as above.

Interim claims

The legislation allows relief to be claimed on an interim basis, assuming that the required conditions have been met. A video game may or may not have a strict budget, but where one is available it should be clear whether criteria are going to be met.

Certain of the conditions which determine entitlement to relief or the amount of relief can only be met with certainty once the video game has been completed. This includes the criteria on:

  • British video game (VGDC40030), and
  • required minimum amount of EEA expenditure (VGDC40040).

For a video game to be a British video game it must be certified as such by the Department for Culture, Media & Sport (DCMS) (VGDC40030). Certification will depend on who is involved in the development and where the video game is made. Although the initial plan may be to make a video game which qualifies as British, changes in response to circumstances (such as the unavailability of British subcontractors) may mean that the eventual video game does not.

If any of the conditions are not actually met on completion of the video game, then the position is adjusted to reflect the outcome. In cases where the payable tax credit has been claimed, this will be repayable to HMRC. Interest will be chargeable on this amount but provided that no careless or deliberate error has been made, no penalty will usually be charged.

Supplementary Information

Claims should be supported by certain additional information. There are two cases with differing requirements:

  • video games which are completed within a single accounting period, and
  • video games whose development takes more than one period.

Each of these cases is covered at VGDC60020.