BREAKING: Tax relief for games developers scrapped

Updated happygeek 0 604 Views

UK Chancellor of the Exchequer, George Osborne, has just sat down after speaking for an hour to deliver the coalition Government's 'Emergency Budget' to a crowded and noisy House of Commons - and it's not good news for the games industry.

Of interest to those in the IT industry in general are the following announcements:

The proposed video games industry tax relief announced by the previous Chancellor earlier in the year, and worth an estimated £1 billion a year to games developers, has been abolished.

The which was also proposed in that same previous budget, estimated to cost every household £6 per year for every telephone line they have in order to fund superfast broadband development in the UK, has also been abolished.

Finally, the rate of VAT (Value Added Tax) will increase on 4th January 2001 from 17.5 percent to 20 percent. This will inevitably impact upon all business, and the IT sector is no exception with an additional 2.5 percent to be added to the cost hardware and services.

Barry Murphy, UK technology leader at PricewaterhouseCoopers LLP, said:

"Today's announcement to withdraw from introducing any relief for the video game industry will hit many businesses, but is not unexpected given the fiscal crisis and much of the economic commentary on the role of such incentives. The lower corporate tax rates and some of the employment tax reductions will help the sector, but the competition for global talent and investment will remain fierce".

Dani AI

Generated

A short, up‑to‑date note for anyone landing on this thread years after ’s original post.

The emergency Budget reaction recorded here is historically accurate as a snapshot of June 22, 2010, but the UK’s position changed later. A formal Video Games Tax Relief (VGTR) was enacted in the Finance Act 2013 and brought into force for expenditure from 1 April 2014; companies were able to begin claiming under the new rules later that year. HM Treasury / GOV.UK press release — HMRC manual: VGTR background. (gov.uk)

A factual correction to the 2010 post: the standard rate of VAT rose from 17.5% to 20% on 4 January 2011 (not 2001). See the Official Report (Hansard) of the Commons debate for the Emergency Budget. (hansard.parliament.uk)

More recently the scheme was reformed. From 1 January 2024 the Video Games Expenditure Credit (VGEC) became available as the successor to VGTR; VGEC offers a taxable credit and changes some eligibility tests (for example, a stronger “used or consumed in the UK” test and no subcontracting cap). There is a transition window: new productions after 1 April 2025 must use VGEC, and all productions move to VGEC by April 2027. — HMRC / Agent update on the change and digital filing rules. (gov.uk)

Practical checklist for developers and studios

  • Confirm which regime applies to your game (VGTR vs VGEC) using the production start and development dates. (gov.uk)
  • Obtain BFI cultural certification where required before claiming. (gov.uk)
  • For claims made on/after 1 Apr 2024 complete the mandatory digital additional information form (AIF) before submitting a tax claim. (gov.uk)
  • File claims via the company tax return (CT600) with supporting calculations and retain full records; HMRC guidance and manuals set out the required boxes and evidence. (gov.uk)

For firm answers about eligibility, accounting treatment, timing and cash‑flow effects, consult the HMRC guidance above and a specialist tax adviser — these regimes are company‑level corporation tax measures with specific documentation requirements.

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