Government drive to find the next Pokemon Go sees UK video games developers claim £45m in tax relief

New figures released today show that video games developers in the UK claimed over £45m in tax relief in 2015-16 as part of the government’s drive to support the growth of the UK’s creative industries.

Video games tax relief was introduced for the first time in April 2014. The relief allows qualifying companies to claim a deduction in their taxable profits, or, where that deduction results in a loss, to surrender those losses for a payable tax credit.

The new figures show that since its introduction, there have been 135 claims for video games tax relief, supporting UK expenditure of £417m. In 2015-16, £45m was paid in relief in response to 130 claims.

In total, 515 video games have applied for certification to be eligible to claim this relief, of which 180 were granted final certification and 255 given interim certification. The remainder of applications are either still pending, have failed or been withdrawn.

Richard Heap, a partner at RSM who specialises in technology, media and telecommunications said:

‘The recent launch of Pokémon Go, and the consequent doubling of the Nintendo share price in Japan, is a further reminder of the global importance of the video games industry which is now worth around $100bn a year. Pokémon Go is essentially an ad platform that finally gives Augmented Reality its first killer app. It will be really interesting to see how long its popularity lasts, if footfall created can be monetised by retailers and whether the UK games industry will follow its lead. 

‘The video games sector is making an important contribution to the UK economy and the government has been keen to support developers to tap into this lucrative market. Following the Brexit vote and the change in government ministerial responsibilities, the industry will no doubt be lobbying hard to ensure that this important relief remains in place for the future.’ 

According to trade body UKIE, the highest concentrations of games companies in the UK are in Brighton, Cambridge, Cardiff, Guildford and Aldershot, Edinburgh, Dundee, Liverpool, London, Manchester, Oxford, Sheffield and Rotherham, and Warwick and Stratford-upon-Avon.