More games received Video Game Tax Relief (VGTR) in 2019 than ever before, says the British Film Institute (BFI).
A record 247 video games received final certification for Video Game Tax Relief (VGTR) in 2019, with UK spend on games reaching final certification for the relief reaching £582.6m, up 189 per cent from £201.9m in 2018.
“In 2019, 247 video games received final certification with an UK development spend of £583 million and a total budget of £1,161 million,” the BFI said on its official website. “UK spend was 50 per cent of the total budget. This is the highest spend on certified British video games since the tax relief was introduced.”
To qualify for relief, games must pass a British Film Institute cultural test in order to qualify for tax relief in the UK, but the tax tank maintains video games tax relief was designed to help smaller producers of “culturally British” games and believes it was not designed for the international market.
To establish a “significant contribution to British culture”, games must satisfy a number of criteria and are awarded points for elements such as British characters, or British settings. Despite being set in the fictional Los Santos, a city modelled on Los Angeles in California, for example, Grand Theft Auto V nonetheless qualified as a culturally British video game for this tax break in September 2015, reportedly after the game had already recorded more than £3bn in sales. The certification allegedly allowed the producers of the game “to claim tax relief on production costs”. When eligible, VGTR permits developers to claim back up to 20 per cent of production costs – or 25 per cent, if it’s a loss-making company.
According to the BFI’s ‘Screen Business’ report, 63 per cent “of VGTR-supported games would not have been made in the UK (or perhaps at all) without the benefit of accessing the relief. It also supported over 9,240 games jobs in 2016”.
“This acceleration in UK development spend in 2019, spurred by the culmination of the current console cycle, also highlights the importance of the UK industry in the global games production supply chain, with high budget international products investing significant expenditure in the UK,” commented UK games industry trade body, Ukie.
“This is clear in the data from the significant rise in overall product budgets (quadrupling to £1.16bn) and the related proportion in UK expenditure shifting from 76.5 per cent to 50.2 per cent. This indicates that development work in the UK is an integral part of multinational projects that may otherwise have been made elsewhere.”
“VGTR could be better, maybe a lower cap could be introduced so that the amounts paid to the very top tier are somewhat reduced,” wrote MCV/Develop’s own Seth Barton last year.
“Tax relief may not be perfect, but the halo effect of having creative businesses such as the games industry in the UK are huge. The fact that there are jobs in the industry on offer in the UK is a motivating factor for innumerable children learning technology skills,” he added.