UK Video Games Tax Relief: What Is BFI Certification and Why Does It Matter?

The UK remains one of Europe’s most attractive jurisdictions for video game development. One important reason is the Video Games Expenditure Credit (VGEC), which allows qualifying companies to recover part of their development costs.

According to HMRC, UK video game companies received approximately £395 million in tax relief for the 2024/25 financial year. The amount paid increased by 18% compared with the previous year.

However, incorporating a UK company is not enough to access the credit. The game must first be officially certified as British by the British Film Institute (BFI).

What does “certified as British” mean?

BFI certification does not mean that the game must be entirely developed by British citizens or that its story must take place in the UK.

Instead, each game must pass the Video Games Cultural Test. The assessment is points-based: a project must obtain at least 16 out of 31 points.

Points can be awarded for:

• the game’s setting, characters, story and language;
• its contribution to British culture, creativity or diversity;
• development, programming, design and audio work performed in the UK;
• the nationality or residence of key team members, including the project lead, programmers, designers, artists and composers.

Consequently, an international studio may still pass the test. A game can be developed by a multinational team and qualify through a combination of English-language content, European or British cultural elements, UK development activity and qualifying personnel.

Interim and final certification

The BFI issues two types of certificates:

Interim certification may be obtained before or during development. It allows the company to claim VGEC while the game is still being produced.

Final certification is required once the game has been completed and is ready to be supplied to the public.

Developers should analyse eligibility at an early stage. If the final game does not satisfy the certification requirements, the company may lose its entitlement to the credit and may need to amend previously submitted tax returns.

How much can a developer claim?

VGEC provides a taxable credit equal to 34% of qualifying expenditure.

Qualifying expenditure is the lower of:

• 80% of the game’s total core development costs; or
• the amount of qualifying UK core expenditure.

Core expenditure generally includes the costs of designing, producing and testing the game. Marketing, distribution and other non-development costs are normally outside the calculation.

The credit is taxable. Therefore, after UK Corporation Tax, its effective net value may be approximately 25.5% of qualifying expenditure, or up to 20.4% of the game’s total core development budget.

For example, if a studio incurs £1 million of qualifying core expenditure, the maximum gross credit may be:

£1,000,000 × 80% × 34% = £272,000

Is a UK company sufficient?

No. In addition to BFI certification, the structure must satisfy several requirements:

• the claimant must be a video game development company within the UK Corporation Tax system;
• the company must be genuinely responsible for developing the game;
• the game must be intended for supply to the general public;
• at least 10% of the core expenditure must relate to UK development activities;
• the expenditure claimed must qualify as UK development expenditure.

Therefore, a nominal UK company that merely owns intellectual property or invoices customers may not be sufficient. The development model, contracts, ownership of IP, decision-making functions and allocation of costs should be structured consistently from the beginning.

For international and Ukrainian game studios considering the UK, VGEC can provide a significant financial advantage. But the tax credit should be built into the production structure before development costs are incurred—not treated as an afterthought once the game is ready for release.

This article is provided for general information and does not constitute legal or tax advice.