How to apply for the UK Video Games Expenditure Credit
Whilst the gaming industry continues to battle many economic pressures, the UK government has been keen to ensure that the UK remains a great place for studios to develop games by evolving their dedicated tax relief for the sector. If you are a studio director, indie developer, or producer making games in the UK, the Video Games Expenditure Credit (VGEC) may prove beneficial to you or your business.
The VGEC replaces the old Video Games Tax Relief (VGTR) and continues to provide a generous tax incentive for game developers. However, a few significant changes have been introduced. Whether you are working on a AAA title or an indie project, understanding the VGEC is essential to maximising your studio’s potential.
What is the Video Games Expenditure Credit?
The VGEC is part of the UK government’s support for the creative industries. It is an “above-the-line” tax credit meaning it acts as a taxable credit based on your qualifying expenditure, instead of a simple deduction from taxable profits.
For games starting production on or after April 1, 2025, the VGEC is the only way to claim relief, replacing VGTR. It offers a credit rate of 34% on eligible UK expenditure.
While this rate sounds appealing, it is taxable at the main corporation tax rate (25% as of May 2026). This leads to an effective net benefit of 25.5% of qualifying expenditure which is a slight increase from the previous effective 25% rate under the old system.
A key change from VGTR is that the credit will now be used to reduce any existing tax liabilities first, helping streamline the process before any remaining credit is paid out to the company in cash.
What are the key changes?
Removal of Subcontractor Caps – The previous scheme limited relief on subcontractor spending over £1 million, whereas the VGEC has eliminated this cap, allowing large, outsourced projects to claim fully on their UK expenditure.
Focus on UK Talent – The new system encourages companies to use UK-based services, pushing for investment in local talent and technology. Those who claimed under VGTR with European costs need to be mindful of this key change.
Higher Overall Benefit – With a net benefit of 25.5%, studios receive more money back, helping to cover the rising costs of game development.
How to Qualify for VGEC in 2026
To qualify for VGEC, your game must meet several requirements:
- You must be a Video Game Development Company registered at Companies House, responsible for designing, producing, and testing the game from the start.
- The game must be certified as “British” by the BFI (British Film Institute).
- The game must be intended for sale to the general public. Games made solely for advertising, promotion, or gambling are excluded.
- A minimum of 10% of your total core expenditure must be used or consumed in the UK.
Only core production costs such as staff salaries, software licenses, and fees for third-party contractors directly linked to developing the game, qualify. For example, marketing and post launch technical fixes are generally excluded expenditure.
If production of your game started before April 1 2025, you may still be under the old VGTR rules, which apply until April 1 2027, before those projects must transition to VGEC. However, any new projects starting production on or after April 1 2025, will need to claim under VGEC.
How to Claim
- Apply for the BFI cultural certificate.
- Keep detailed, accurate records of all UK-based expenditure.
- Submit your claim through your Company Tax Return (CT600). This includes the Additional Information Form, which must be submitted before the return.
- Starting April 6, 2026, you must include the specific CT600P Creative Industries supplementary page when filing your claim.
Claims can be made on an interim or final basis. This means you do not have to wait until the project is finished to make a claim.
If you are looking to start a new project, or are already in the middle of a project, you should speak to a tax adviser such as us, with specialisms in the gaming industry. This will help ensure you maximise the available benefits from the existing VGTR and / or the new VGEC schemes.
How we can help
To explore how VGEC can benefit your project, or if you have any questions regarding eligibility, claimable benefits, or the claim process, get in touch with us today.
