As part of the UK long term economic plan the video games sector is being nurtured by ensuring that the right conditions are in place. Video games companies have been able to claim tax relief on the production costs of games certified as culturally British from August 2014.

Video games must achieve a level of points which they are awarded based on their cultural content, cultural contribution and the location of the game’s development and nationalities of key personnel working on the project.

Video games tax relief builds on the model of the film tax relief. Like the High-End TV and animation tax reliefs, development companies are eligible for a payable tax credit worth 25% of qualifying costs.

95% of UK video games developers are SMEs. It is estimated that this new corporation tax relief will provide around £35 million of support per year to the sector.

In the first six months of the tax relief, 32 games received final or interim certification, meaning that they qualify under the cultural test and can claim tax relief from HMRC. These games have made a total spend in the UK of £47 million between them.

Nine games have already received a final certification and been released, with a UK spend of £2.3 million between them, or £256k per game on average.

For the 23 games that currently have interim certification and are in production, the expected UK spend is £45 million, or approximately £2 million per game on average. An additional detail is provided for the games in interim certification: their total budget is expected to be £54 million, so 82% of their budget is being spent in the UK.

A ministerial answer in Parliament last December revealed that the pace of applications has recently increased, which is not reflective in these figures. Early indications are therefore that momentum is now gathering, and hopefully next year’s statistics will be even more successful. However, as set out in the manifesto, more work still needs to be undertaken to promote the UK’s game tax relief internationally as a great place to make and develop games.

This is not only good for the video games industry but also for all the freelance professionals working in this sector.