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Video games are one of Scotland’s strongest exports. Our pool of talent in this industry is significant, and we’re home to some of the best, most creative games studios in the world. Scottish universities, including the University of Abertay and University of the West of Scotland, boast globally-renowned games courses. To support this booming national industry, we've introduced a range of major financial incentives that make it easier for developers to succeed. 

This move – in place since 1 April 2014 – brings the UK games sector tax regime into line with other countries, such as Canada and France, making Scotland one of the best places in the world to develop new games. By increasing investment, we’ll be able to create more jobs, drive innovation and support the production of more world-beating Scottish games.

Hazel Pratt of the Video Games & Digital Media Team at Henderson Loggie, describes what International companies need to do in order to take advantage of the new tax relief:

How to qualify

The relief is applicable to UK-registered companies (not partnerships or limited liability partnerships) who have at least 25% of their core expenditure used or consumed within the EEA. If you have asked another business to help you, their costs are capped at £1 million.

Eligible companies must then sit a ‘cultural’ test set by the British Film Institute. Passing is dependent on a number of significant factors:

  • The inclusion of locations, characters, dialogue and stories which centre on the UK or EEA
  • Promotion of UK culture within the game
  • The presence of British or EEA personnel on the staff

Playing by the rules

Once qualified, each game will be treated separately. The company must be responsible for designing, producing and testing the game. If companies are collaborating, only one company can apply per game – and neither initial design concept costs nor finalised maintenance costs are allowable. The rights of the game must be directly negotiated, contracted and paid for by the company themselves.

Each game will be treated as starting when it enters the design stage or the date that it receives funding if earlier.

Claiming your tax relief

The claim will be included in the company’s corporation tax return submission. If it has a taxable loss, it can surrender this for a credit of 25% of the loss. Alternatively, credit can be used to reduce the corporation tax charge on the company. The loss surrendered is restricted to the level of the enhanced deduction.

With companies subject to a cultural ‘Britishness’ test – we’re ensuring that the money will enrich the UK games industry as a whole.

If you want more information on the tax relief or information on how SDI can help you set up or grow your games business in Scotland.