UK games tax relief: How do you get it?

[Music] see I'm Colin Seeley I'm Julia Brown from the the bf5 booth certification Allister we're just gonna take it to hear a little bit about the tax the creative industry tax reliefs that are available for video games in the UK and what they're worth and how to qualify for them through the cultural test which is what the BFI operates on behalf of government to administer so I think it's always a good idea to start with what it's worth so if you're developing video games in the UK you can stand to earn back about 20% of the development expenditure in a given year if your games the loss-making if it's still in development so the way it's worked out is that expenditure in your game is split into core expenditure and non core expenditure core is expenditure that's directly related to the development the

video game non-course things surrounding that like legal and marketing and the read of relief is 25% of the core costs but the total core is capped at 80% so we're excited about 20% so the quick example there is if you're making a game with a 100,000 pound budget all core expenditure you'll be able to get a check for $20,000 see with your returns that's conditional how they actually spent the money during the year but you can again finance against claiming that money back at the end of the year there are companies that will loan you money sort of secure it against that so in order to access that there are a few points you need to hit in order to qualify to be eligible so you need to have a UK video games development company that set up in the in the UK so it needs to be registered to companies hosts it needs to be set up for full development so you can do exploratory work and prototyping beforehand but once you move into full production you need

to get the the ridiculous development company set up beforehand if you have any concerns about when you started or when to get that set up you should definitely get in touch with HMRC and talk to them about that you need to be spending at least 25% of the total core expenditure in the UK EEA in order to be eligible the videogame needs to be intended for supply which means that it needs to be available to the public but definition of that is quite broad - it can be available free or paid it can be available within museums or something like that this new limit on where or how it's released but it's not it means games that are sort of only played like at sort of private team-building retreats or something like that they wouldn't be available needs to be available to the public but there's no restriction on price or cost and then the final point which is what the BFI is most directly involved in is that it has to be certified as British through the cultural test because the the tax reliefs are idiot and in order to meet the European Commission's stated regulations you need to be certified as

a British game and the rest of the talk is going to be about them what that entails so the cultural test basically it's a 31-point test you only have to get 16 points to pass and there are four section sections that you can potentially pass in that's the content of the game so where the games set who the characters are the language this cultural contribution which is British creativity British heritage and diversity there's cultural hubs which is where the game is made and there's cultural practitioners which is who's made the game so the first in section air which like I said is the content of the game the first section is to do with setting you can get points for the game being set in the UK or the European Economic Area a maximum of four points it's calculated on a percentage basis so if you've got if the game is partly set in the UK but then partly set outside Europe then you wouldn't necessarily get the full four points paid - calculated on a percentage basis so one point two points etc you can also get points for the game being set in something called

an undetermined location so that's things like a fantasy or science fiction location or a completely generic forest or C or something like that the characters are calculated the points for that calculated on a similar basis you get points whether being British European and also for being resident in undetermined location or an undetermined nationality that's kind of calculated if your game has lead characters we kind of look at the three lead characters and whether if you've gotten in samba cast so say if it's some kind of fighting game and you have like 20 carrots you can choose some all of equal prominence then again we would calculate in our percentage versus so this just to give you an example of some settings and characters that have passed and just give you an idea how different they are so far the horizon - that's got European setting and characters everybody's gone to the rapture is probably the typical idea of what people think passes the cultural test so it's very clearly you care setting UK characters I am bread it's something

that kind of comes under the undetermined sort of umbrella so obviously that's got quite a generic setting and the character is a piece of bread but that can still pass that gets points because it's within that one determined nationally generic setting and also Grand Theft Auto again people don't necessarily think that would pass but because the people that come up with the idea are British that actually gets some points in terms of the content and obviously the work some of the work was done here so yeah then the next set of points are available either for a story or underlying material so the first one is for story which is a UK and EE a story or subject matter only there's no undetermined story points so this would be if you're exploring themes or ideas or or a character even if the even if the setting it's a point somebody from the UK you know traveling somewhere else

then that's normally fine but I mean in the mobile space there aren't a lot of games that are explore these sorts of ideas or themes one thing we have had is if you're if you're doing a mobile adaptation of for example a British television show like a quiz show or something that's widely known is having been developed here then generally you'll be able to claim subject matter straightforwardly for that but if you can't get it for the on screen story then there's also underlying material so this is where your the team that comes up with the the concept behind it or the original design the design document script and sort of underlying material like that if they are a qualifying person so if they're resident in the UK or EEA or if they're a citizen of either of those some bodies then you can get points here so this is the list of online material in the film world it's called a we require an underlying material document we require

some supporting documentation for it so the film world said sorry it's called a chain of title and we can accept an employment contract or a designer's agreement something along those lines if you want to claim these points but it does have to specifically tie the person to the work which in the games industry is pretty non-standard in the the film world where a lot of this test content is derived from it's much more standard but we have a third option which is a document that we refer to is on an underlying material Declaration which we have a template for on our website which is a essentially way of having the person that created them the lying material attested in a legally valid way and it's pretty inexpensive to get done and it's up there to assist you if you want to claim these points okay the last section is section a is a language and you get points for the game being English and it doesn't matter whether it's British American English Australian English or another UK indigenous language this is also worth four points and this is not just say Spock and

dialogue we've written dialogue if your game just has written instructions or a menu it can get the points here and one thing I'd like to say is if your game is all set in the UK or Europe you can potentially just pass in that section alone like I said it's a 16 point test you can get all 16 points in section area however if your game is set in a determined location then determine characters but the underlined material is British you can end up potentially getting 15 points in section a which means you just need one more point to pass which is where this section section B and can potentially earn you that point yeah section B is a little bit more ving in terms of how the points are awarded but it's generally for the work that's going on behind the game or or or for some specific aspects of content don't screen so there are four total of four points available within three sections a maximum of two in each section so the first is for British creativity and this is generally for unique innovative or

envelope-pushing content and it can be on the creative side of things or the the tactical side of things so you can demonstrate that you're using some new technology or that your UTM features a quantifier the new experience for people or it's the first time a pretty studio verse on this we also look at things that are innovative within their genres so if there's honors that have a really really established style and your game does something the kind of breaks out of that or expands on it in some way that we can then we can look at that as being part of British creativity the next section is British heritage so this is for games that feature people or events or movements that are an important part of British heritage and it can be video game heritage as well if you're looking at something to do with you know the beginnings of the industry in Britain or you're adapting a property that was you know hugely influential in the 1980s or something like that then we can we can look at that as well there has to be some sort of direct connection though it has to directly feature an event or

feature a person you know we get a lot of people stating that their sense of humor is inspired by Monty Python for this point but it needs to be a more direct connection than that okay the last section is section B is diversity and this is even in terms of on screen or off-screen diversity so if you have a character from underrepresented group on screen or it's exploring themes related to that then you can get a point but also if you have someone from an underrepresented group sort of in a senior position in your development team then you can potentially also get a point for that so Section C is cultural hubs this is essentially where you're spending money on the game and there are points bill for this there that they're very straightforward it's um if you have any of those different areas of work if over fifty percent of your total expenditure in those areas is within the UK then you can you can clean points here it's worth noting at the bottom there so in Section

C and D you require an accountant to verify the money spent and the nationality of the people that you're claiming for when you go for your final certificate which we'll talk a little bit about later but when you're having that a partnership or done it can it can be quite expensive but it's worth noting that only the relevant expenditure needs to be verified and you're claiming these points you don't need to have a full audit done of the game okay in the last section is to do with the personnel that have worked on the game and it's also like Khan says has to be verified by that account report it if you've got it's worth noting - these are the roles that you can potentially earn points for it's worth knowing that if you've got quite a small development team if there's one person that fulfills multiple roles you can get a separate point for each of those for each of those roles that they fill again this requires the account to part and only the roles mentioned they're worth points so they're the only ones that need to be verified okay in terms of how you

actually apply we have an online application form on our website which is at the bottom of the screen there we offer interim and final certificates so an interim it's a certificate that can be awarded whilst the game is still in development final is awarded sort of once the games complete obviously with a lot of mobile games there's going to be ongoing development in that situation you can potentially apply for either an interim or a final certificate depending on the content of the game and there's also the decisions there in terms of your actual tax relief claim but if you do have some questions about that he's probably worth getting into it - those it's a four to six week turnaround time you apply online like I said but then you're also required to print off a hard copy and send that towards a statute declaration and once we receive that statue declaration that's when the sort of turnaround time kicks in we have guidance notes on our website I'd recommend sort of reading those before

you apply and then getting in touch with those with any questions like I mentioned before you can potentially pass only in Section A or only in section a and B once you think you've reached sixteen points it's probably best stopping there you don't have to solve if you think you pass only a section here there's no point filling in C and D because then it's kind of just wasted your time a little bit but when we're actually assessing it if you have filled in the wrong point so if we don't actually think that you get the points you've applied for it's not that you're going to fail we'll just be in touch to say to you you know these are the points we think you actually get throughout the a sort of assessment process we're going to be in touch with you it's not going to be as simple yes or no when you're applying we do require some additional supporting documents some of them have been mentioned before I mentioned the underlying material declaration for a3 be the underlying material we do require a budget or a final cost part depending on whether you're applying for interim or final we do require a development

schedule to sort of show when you started and when you have completed or intending to complete the game to help us assess interim projects we require some kind of game design document or other visuals that kind of help as assess you know the content of the game where it's set one can exit the game are who the characters are like I said the chain of title or underlying material decoration and then if you're applying those C and D points at final application stage only we do require the account report and we do have templates for all of these documents on our website so if you don't have a budget sort of a formal budget yourself you can use that and like I said you do require two centers in a hardcopy if that's just the application form and the statutory declaration unless you're getting and material decoration done and the counterpart which we also require in hardcopy everything else can be submitted online yes at the end of this process you'll be issued a certificate

from the the BFI that certifies a specific IAM and in both an individual project as british and then when you apply to do your tax returns HMRC you'll be able to apply for the tax relief and they'll need to see that certificate attack so that's what you end up with at the end of the the cultural test process in order to then be able to clean that that relief but that's it for the talk does anybody have any young sister questions maybe about a project they're working on or other considerations yeah that's alright if you don't have any now if you think that you apply that actually might actually something just gonna be useful for you then absolutely have a look at our website if you have any questions get in touch we're happy to meet and discuss any individual projects I'll just pick up the phone and talk to us [Music]