Picture a six-person studio in Leeds, eighteen months into a narrative puzzle game, with payroll and contractor invoices stacking up. The video games expenditure credit can return a slice of that spend, but only if the studio gets certification and paperwork right. Get it wrong, and the money doesn’t arrive.
This guide covers who qualifies, which costs count, how the vgec rate works and how to claim. The rules below reflect official guidance at the time of writing (October 2026). Check them before you file.
What Is Video Games Expenditure Credit (VGEC)?
VGEC is a taxable credit that rewards UK game development spend. It works through Corporation Tax, and HMRC sets it at 34% of qualifying expenditure, according to HMRC’s guidance.
That 34% is a headline figure, not a check. The credit counts as taxable income, taxed at the main Corporation Tax rate. At 25%, the net value comes to about 25.5% of qualifying spend.
It also replaces the old scheme. Video games tax relief replaced by VGEC is the short version of a longer story, which the comparison section below covers.
Who Can Claim VGEC in the UK?
Only a video game development company inside the UK Corporation Tax net can claim. It must be the company responsible for designing, producing and testing the game.
Which Companies and Games Qualify?
VGEC eligibility turns on the company, the game and the spend. The game must be certified as British. Games made for advertising, promotion or gambling are out, per HMRC.
At least 10% of core expenditure must also be UK expenditure. Core expenditure means the costs of designing, producing and testing the game.
Indie studios can qualify. So can mobile and free-to-play titles. There’s no size threshold or platform test, but each case depends on the statutory conditions. Check them against your own facts.
What Is the BFI Cultural Test?
The British Film Institute runs the points-based cultural test. A game needs at least 16 out of 31 points to pass. Points reward things like UK-based development, British content and the use of UK talent.
Studios can seek interim certification during development and final certification once the game is complete. Start collecting evidence from day one. Rebuilding a paper trail eighteen months later is miserable. Details sit on the BFI’s certification pages.
Which Development Costs Qualify for VGEC?
Costs must relate to designing, producing and testing the game, and they must be used or consumed in the UK. That second test is what the vgec core expenditure definition hinges on.
Employee Salaries and Development Costs
Payroll is usually the biggest line. Programmers, designers, artists and testers working on the game generally count, along with related employer costs such as National Insurance and pension contributions.
Split time carefully. A programmer who spends half the month on the live game and half on a different project only counts for the share spent on the certified title.
Freelancers and Outsourced Work
Freelance developers, artists, composers and voice actors can qualify. The question is where the work gets done and whether the service is used or consumed in the UK. EEA spend no longer qualifies the way it did under the old scheme.
An animator working from Lisbon, for instance, is unlikely to produce qualifying UK expenditure. Document where each contractor works.
Which Costs May Not Qualify?
Don’t assume everything on the budget sheet counts. These usually need a closer look:
- Marketing, promotion and distribution
- Concept development and other non-production activity
- Unpaid founder time, since no cost is incurred
- Profit-share arrangements that aren’t a genuine expense
- Payments to connected parties that aren’t at arm’s length
Keep invoices, contracts and time records for all of it. HMRC can ask.
How Much Can a Studio Claim?
Qualifying expenditure is the lower of two figures: 80% of total core expenditure, or the UK core expenditure actually incurred. The credit is 34% of that lower figure.
Here’s an illustrative example. It isn’t a prediction.
| Item | Amount |
| Total core expenditure | £500,000 |
| 80% of total core expenditure | £400,000 |
| Qualifying UK core expenditure | £300,000 |
| Qualifying expenditure (the lower figure) | £300,000 |
| Gross credit at 34% | £102,000 |
That £102,000 is a gross credit. It’s taxable, so is vgec taxable? Yes. At a 25% Corporation Tax rate, the illustrative net benefit is about £76,500. How the credit is actually used, and whether any is paid out in cash, depends on the company’s tax position and the statutory process. Don’t budget on the gross figure.
What Has Changed?(VGEC vs VGTR)
VGEC vs VGTR comes down to who calculates what. The old relief reduced taxable profit and counted UK and EEA spend. The new credit is calculated on UK spend only and sits above the line as taxable income. The 80% cap carries over.
Dates matter here:
- VGEC applies to expenditure from 1 January 2024.
- Games starting development on or after 1 April 2025 must use VGEC.
- Earlier games can stay on the old scheme until it ends on 1 April 2027.
So when did the game start? That one fact can decide which scheme applies. A video games tax relief UK claim built on the wrong regime gets rejected.
How Does VGEC Interact With R&D Tax Relief?
R&D tax relief is a separate scheme, and it’s where double-dipping trouble starts. As a general rule, you can’t claim VGEC and R&D relief on the same expenditure. Pick one route for each cost.
Studios doing genuinely novel technical work, such as a custom engine or new rendering technology, should split those costs cleanly between the two claims. Do it early, not at filing time. A clear allocation method backed by timesheets saves awkward questions later, and a complex split is worth taking to a qualified adviser.
How to Claim VGEC Through HMRC?
How to claim video games expenditure credit boils down to five steps. The vgec claim process runs through your Company Tax Return, and there’s no standalone vgec application form.
Step 1: Check eligibility. Confirm the company, the game and the accounting period. Work out which scheme applies.
Step 2: Obtain BFI certification. Apply for interim certification during development and final once complete. Gather your cultural test evidence early.
Step 3: Calculate qualifying expenditure. Go through payroll, invoices and contractor agreements. Separate UK spend from the rest. Flag connected-party deals and R&D overlap.
Step 4: Complete the forms. You claim on the Company Tax Return. For returns submitted on or after 6 April 2026, HMRC requires the CT600P Creative Industries supplementary page. Claims also need the Additional Information Form. Confirm current requirements in video games expenditure credit hmrc guidance before filing.
Step 5: Submit and keep records. Review every figure first. Then file, and keep a complete record set in case HMRC asks questions later. Hold on to:
- Your interim and final BFI certificates
- A cost breakdown showing UK and non-UK spend
- Invoices and contractor agreements
- Payroll records and timesheets
- Your R&D allocation workings, if relevant
- Submission confirmations from HMRC
The vgec deadline follows Company Tax Return time limits, including limits for amendments, so check HMRC’s current rules if you need to correct a claim.
Common VGEC Claim Mistakes to Avoid
- Assuming every development cost qualifies
- Treating 34% as cash in the bank
- Leaving BFI certification until the game is finished
- Mixing up VGEC and the old scheme
- Counting overseas contractor spend that isn’t used or consumed in the UK
- Ignoring overlapping R&D claims
- Filing without the CT600P or the supporting information
Frequently Asked Questions
What Is the Video Games Expenditure Credit?
It’s a taxable credit for UK game development spend, claimed through Corporation Tax. It replaced the old relief for new games.
How Much VGEC Can a UK Game Studio Claim?
The gross credit is 34% of qualifying expenditure. That figure is taxable, so the net value is lower.
Can Indie Game Developers Claim VGEC?
Yes, if the company, game and expenditure meet the conditions. Size alone doesn’t rule you out.
Which Forms Are Required to Claim VGEC in 2026?
You need the Company Tax Return, the CT600P for returns submitted from 6 April 2026, and the Additional Information Form. Confirm current HMRC guidance.
When Does Video Games Tax Relief End?
The old scheme ended for all games on 1 April 2027. After that, VGEC is the only route.
Conclusion
Strong claims share the same traits: a certified British game, clean UK cost records and the right forms filed on time. Treat the 34% as a starting point, since the net benefit depends on tax.
Rules shift, so read the latest HMRC and BFI guidance before you file. For anything unusual, talk to a qualified adviser. And if you want to keep up with what’s happening in gaming beyond the tax side, APKJuly is a good place to start. The credit is worth claiming properly.
