Important update: VGTR has been replaced by VGEC
Video Games Tax Relief (VGTR) closed to new claims on 1 April 2025 and was replaced by the Video Games Expenditure Credit (VGEC). UK game studios with accounting periods straddling that cutover may still be able to claim VGTR for the pre-April 2025 portion, but all new development costs are now claimed under VGEC. The BFI Cultural Test still applies, the cash benefit is broadly comparable and most studios end up better off under VGEC at the headline level.
This guide explains how VGEC works, who qualifies and the practical funding question that comes with it: how do you keep a studio running while you wait for HMRC to pay out?
What is the Video Games Expenditure Credit (VGEC)?
VGEC is an above-the-line expenditure credit calculated on qualifying UK core expenditure on a video game. The headline credit rate is 34% of qualifying expenditure, with the credit treated as taxable income. After corporation tax, the effective net benefit is approximately 25.5% for most profitable studios, with loss-making studios able to surrender the credit for a payable cash amount from HMRC.
In practical terms:
- A studio with £500,000 of qualifying UK core expenditure could see a net benefit in the region of £125,000.
- A studio with £2 million of qualifying expenditure could see a net benefit in the region of £500,000.
These numbers are illustrative. The exact amount depends on the studio’s tax position, the split between UK and overseas spend and how the credit is taken (cash payable credit vs corporation tax offset). A specialist creative-industries tax adviser is the right person to model your specific position.
Who qualifies for VGEC?
VGEC carries forward most of the eligibility framework from VGTR:
- Company eligibility. Your company must be a UK-registered company (or have a UK permanent establishment) and be directly responsible for the design, development and testing of the video game.
- Cultural test. The game must pass the BFI Cultural Test for video games. The test awards points for cultural content, cultural contribution and cultural hubs, and most UK-developed games pass comfortably.
- Intended for supply. The game must be intended for supply to the general public. Internal tools or non-commercial gamified apps typically do not qualify.
- UK core expenditure threshold. Under VGEC, at least 10% of qualifying core expenditure must be UK-based (the previous VGTR rules referenced 25% UK or EEA spend).
Core expenditure covers costs directly related to designing, producing and testing the game. This includes staff salaries for developers, artists, designers and QA testers, as well as qualifying subcontractor costs.
How do you claim VGEC?
The claim process involves two separate workstreams:
- BFI Cultural Test certification. You apply to the BFI for an interim or final certificate confirming your game passes the Cultural Test. Interim certificates can be obtained during development, final certificates once the game is complete.
- Corporation tax return claim. You include the VGEC claim in your company’s corporation tax return (CT600), with supporting documentation.
Most studios use a specialist creative-industries tax adviser to handle both. The cultural test scoring and the expenditure calculations require detailed knowledge of the scheme and supporting documentation that builds up across the development cycle.
VGTR transitional rules
If you started development before 1 April 2025, you may have a choice for accounting periods that span the cutover:
- Costs incurred before the cutover may still be claimed under the old VGTR regime.
- Costs incurred after the cutover are claimed under VGEC.
- New games starting development from 1 April 2025 onwards are VGEC-only.
Your tax adviser will model both routes for any straddling period and recommend which gives the better net position.
The cash flow problem: HMRC takes time to pay
Whichever scheme applies, the practical issue is the same. The credit is claimed via your corporation tax return after the financial year ends, and HMRC then takes several months to process and pay out. In practice the gap between incurring development costs and receiving the cash from HMRC is often 12 months or more.
For a studio managing payroll, contractor invoices and ongoing operating costs, that delay creates a real cash flow constraint. The money is coming, but salaries are due now.
How Fundably can help while you wait for HMRC
Fundably is a UK commercial finance broker with a panel of 50+ lenders. We do not currently offer a dedicated VGEC advance product, but we can help studios bridge the HMRC wait through general business funding:
- Working capital finance to cover payroll and operating costs across a development cycle.
- Business loans for studios that want fixed-term, fixed-cost funding tied to a specific milestone or release.
- Invoice finance for studios doing publisher work-for-hire who invoice on milestones.
- Asset finance for hardware (development kits, capture rigs, GPU clusters) that you want to spread the cost of.
The initial matching uses a soft credit check, which does not affect your credit score and is not visible to other lenders. As a commercial finance broker and NACFB member, Fundably handles the panel, the paperwork and the negotiation. To be eligible, you need to be a UK Limited company with at least 3 months trading history and monthly revenue.
If you are also doing genuinely novel technical work (engine architecture, networking, AI, rendering pipelines) that is separate from the broader game-development costs claimed under VGEC, you may have a parallel R&D tax credit claim worth modelling with your adviser.
Ready to find funding for your studio?
If your studio needs cash to keep development on track while you wait for HMRC to pay out a VGEC claim, Fundably can match you with funding from our 50+ lender panel.
Check your eligibility now and see what your studio qualifies for.