A new tax relief is now available to companies producing video games enabling them to claim tax relief on their production costs.
Effective since August 19th 2014, it is for to companies producing games that are certified as ‘culturally British’. They can then start claiming the tax relief against qualifying expenditure incurred since April 1st 2014 and, if eligible, can receive a payable tax credit of up to 25% of the surrenderable loss.
However, some video games development companies may be carrying out R&D, but not claiming or may have claimed R&D tax relief in the past.
HMRC reminds us that “It’s important to note that where SME R&D tax relief is claimed on a project, that project cannot claim for any other State Aid reliefs”. So if a company chooses to claim tax relief, any R&D work claimed within the project cannot qualify for any other state aid relief under the SME scheme.
Video games developers could be eligible for both the R&D tax relief and the Video Games Tax Relief programmes, but need to decide whether to claim under one scheme or the other.