What is the Video Games Expenditure Credit?
VGEC is a taxable Corporation Tax expenditure credit available to qualifying video game development companies. It is calculated by reference to qualifying core development expenditure on a certified British video game rather than on the company’s general trading results. It replaced the previous Video Games Tax Relief framework under transitional rules and is claimed through the company’s Corporation Tax return. Because the credit is taxable and then passes through a statutory redemption sequence, the 34% headline rate is not the same thing as the cash a company ultimately receives.
Who can claim VGEC?
The claimant is normally the qualifying video game development company, or VGDC. That is generally the company directly responsible for designing, producing and testing the game, actively engaged in planning and decision-making, and directly negotiating, contracting and paying for the relevant rights, goods and services. Subcontracting part of the work does not automatically prevent qualification, provided overall responsibility is retained, but a company cannot outsource all substantive control and qualify merely because the contracts pass through it. Copyright ownership or financing alone is not sufficient, and only one company can be the qualifying VGDC for a game.
What makes a video game eligible for VGEC?
Broadly, the game must be certified as British by the BFI, be intended for supply to the general public, have at least 10% of its total core expenditure as UK expenditure, be produced by the qualifying VGDC and be claimed within the UK Corporation Tax framework. Supply to the general public means the game is made available for members of the public to play. A game does not qualify if it is produced for advertising, for promotional purposes or for gambling. Each condition has to be met on the facts of the particular game and accounting period.
Are mobile, console and PC games treated differently?
Platform alone is not decisive. The rules apply to an electronic game played through a video device, and qualifying games may be developed for consoles, PCs, mobile phones, tablets or handheld devices. That does not mean every application, interactive product or piece of software is a qualifying video game, and the statutory conditions still have to be satisfied. Hardware development is not part of developing the video game merely because hardware is supplied with it.
Is BFI certification required for VGEC?
Yes, the game must be formally certified as British. Interim certification can support a claim while development remains incomplete, and final certification is required after the game is completed. A certificate must be valid when it is used for the claim. Certification is decided by the BFI on its own criteria and is separate from the Corporation Tax claim, so the tax position should not be treated as settled before the certification position is clear.
Which video game development costs can qualify?
Core expenditure concerns designing, producing and testing the video game. Depending on the facts, that can include game design after the initial concept stage, programming, art and animation incorporated into the game, audio used in the game, production and integration, and qualifying testing. Inclusion depends on the activity, the production-trade treatment and the other statutory conditions, so not all staff costs and not all software development qualify. This page does not attempt an exhaustive statutory list.
Are concept design, debugging and post-release maintenance included?
No. Initial concept design, debugging and post-release maintenance are not core expenditure, and neither are advertising, promotion and distribution or commercial exploitation activity. Initial concept design concerns the speculative or commercial-feasibility stage, and design expenditure normally begins after the decision to proceed with development. Actual development may move between phases rather than following a perfectly linear sequence, so costs must be attributed on a just and reasonable basis and classified by what the work actually involved rather than by job title.
How does the 80% expenditure restriction work?
Qualifying expenditure is generally the lower of 80% of total relevant core expenditure and the actual qualifying UK core expenditure. In other words, the 80% cap sets a ceiling and the UK expenditure figure can bring the qualifying amount below that ceiling. A company with a high proportion of overseas development will normally be limited by its UK expenditure, while a company developing almost entirely in the UK will normally be limited by the 80% cap. The restriction is applied before the credit rate.
Is the 34% VGEC rate the amount paid to the company?
No. The applicable headline rate is 34%, applied to qualifying expenditure after the relevant restrictions. The resulting credit is taxable income, and it then enters the statutory redemption process, which can involve current-period Corporation Tax, the notional tax restriction, relevant earlier Corporation Tax liabilities, other HMRC liabilities and group surrender where permitted before any remaining payable amount arises. The amount ultimately available depends on the company’s Corporation Tax and other relevant positions, so a net percentage should not be treated as guaranteed.
Can the same expenditure qualify for both VGEC and R&D relief?
Expenditure that is capable of qualifying under an R&D relief scheme may be excluded from VGEC, and a company cannot include that expenditure in VGEC merely because it chooses not to make an R&D claim. This requires cost-by-cost analysis rather than a blanket position, because the same game may contain different cost categories with different treatment. No double relief should be assumed. Detailed R&D qualification and calculations are outside the scope of this page.
How and when is a VGEC claim made?
A claim is made through the Company Tax Return, supported by the additional information requirements and, where required, CT600P. The broad sequence is to confirm the VGDC and game eligibility, confirm BFI certification, maintain game-level accounting records, prepare the qualifying-expenditure calculation, prepare the additional information form, file the return and retain the supporting evidence. A claim may generally be made, amended or withdrawn up to two years after the end of the relevant period of account, and relevant Company Tax Returns submitted on or after 6 April 2026 must include CT600P. Eligibility and records should be reviewed well before the filing deadline.
