Creating new landscapes, new characters and new game modes is incredibly resource-intensive, particularly if you’re an early-stage video games business. Thankfully, support is available to help bring those new worlds to life. Here, Stuart Burnside, Video Game Certification Analyst at the British Film Institute (BFI), explains how Video Games Tax Relief can help ease the financial burden for developers and ensure that money isn’t a barrier to new games being made.

Video Games Tax Relief (VGTR) was introduced in 2014 to support UK games companies pay for the
development of games that are certified as British.

The organisation responsible for certification is the British Film Institute (BFI), which works on behalf
of the Department for Digital, Culture, Media & Sport (DCMS) across the film, television, video
games, animation, and children’s TV industries.

Stuart Burnfield joined the BFI in 2015 and has spent the last six years advising games companies on
how to get their games certified as British.

The formal mechanism used in the certification process is what’s known as the Cultural Test.

Passing the Cultural Test

The Cultural Test is a points-based system broken into four different sections – cultural content (16
points), cultural contribution (4 points), cultural hubs (3 points) and cultural practitioners (8 points).

A total of 16 points is needed before a video game can be certified as British.

Cultural content is probably the most important section of the Cultural Test as it is worth the most

“Some people pass the test purely on the cultural content of the game alone,” explains Stuart. “This
is where we look at things like characters, setting, if the game is based on British or European
underlying material and so on.”

Cultural practitioners is the next section and looks at who is making the game, and whether the
developers, artists, programmers and designers are UK or EEA residents.

Then there’s the section on cultural contribution, which asks whether the game reflects British
heritage or diversity.

The cultural hubs section looks at where money is spent developing the game, and whether that’s in
the UK.

What it’s worth

If a game passes the Cultural Test and is certified as British, then the games company that has
created it can apply for VGTR.

The relief can manifest in either a reduction of a company’s corporation tax bill if the game proves to
be profitable, or a cash payment from HMRC at a rate of 25% if it makes a loss.

On average, VGTR is worth around 20% of the core production costs of a game i.e., the design,
development and delivery.

“It’s sometimes easier to think of what’s not core spend,” says Stuart. “Marketing, entertainment,
going to events; these things wouldn’t be class as core spend.”

Other criteria

In addition to the Cultural Test, there are certain other HMRC criteria that must be met before VGTR
can be granted.

Stuart explains: “One is that the games company has to be a UK business.

“There also needs to be at least 25% game spend in the UK or EEA.

“Lastly, the game needs to be intended for supply – there needs to be an intention to release it at
some point.”

For example, VGTR wouldn’t be suitable if a game were being made for a specific workplace training
scheme or some other internal programme – it has to be made available to the general public,
whether that’s for free or paid for.

“As long as the game meets those criteria, it’s fine,” adds Stuart.

Raising awareness

The certification team at the BFI spend a lot of time doing outreach in the games industry to try and
raise awareness about VGTR and how it can make all the difference between a game being made
and not being made.

Those efforts are starting to pay off as there are now more games companies applying for VGTR than
ever before.

Stuart says: “However, there are still a lot of eligible businesses that haven’t applied for it.

“When I go to events around the country and speak to games developers, most of them are aware of
VGTR. But sometimes there are misconceptions and developers might not want to do the paperwork
side of it.

“We always want to get the word out there more and more.”

For those who have accessed VGTR to help bring their games to life, particularly smaller developers,
start-ups and SMEs, the relief is now a key pillar of their financial planning.

“What we’re seeing now is games companies factoring the relief into their budgets and even their
pitch documents if they’re pitching to investors,” says Stuart.

“It shows an investor that the company has a handle on all the funding routes it has access to.”

Other sources of funding

Of course, VGTR is not the only source of funding for those looking to make an impact in the games

The UK Games Fund is another source with the remit of supporting early-stage games development
and digital interactive businesses.

Run by the UK Games Talent and Finance Community Interest Company (UKGTF), the fund offers
grants of up to £25,000 and has funded more than 100 game projects to date.

The UKGTF’s Tranzfuser scheme also offers UK graduates the opportunity to develop video game IP,
acting as a talent development launchpad for those look to pursue careers in gaming.

Key takeaways:
- For more information about Video Games Tax Relief and the Cultural Test, head over to the BFI’s website:
- Information about the UK Games Fund can be found at:
- Information about the Tranzfuser scheme can be found at:

Related campaign

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Richard Dawson
Article by Richard Dawson
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