HMRC statistics show £105m was claimed in video games tax relief (VGTR) in 2017/18, up from £79m in 2016/17. There has been a 20% rise in the number of companies granted VGTR in the last year, which totalled 345 compared to 285 in 2016/17.

Moore Stephens says the VGTR aims to make the UK an attractive destination for video game companies through offering enhanced tax relief on up to 80% of the total expenditure on designing, producing and testing a game. The firm says the increased take-up suggests the industry is expanding again after a period of slow growth in recent years.

The UK video games industry grew quickly in the 1990s on the back of such runaway successes as the Tomb Raider and Grand Theft Auto series. However, growth in the games industry in the US, China and Scandinavia has eclipsed some of the early success of the UK.

Sarah Friend, partner at Moore Stephens said: ‘The UK is aiming to be a world leader in video game production, and kickstarting that through use of targeted tax reliefs seems to be yielding results already.

‘Attracting video game businesses from overseas to relocate to the UK is a critical part of building a globally-competitive video games industry. We’ve certainty seen examples of that happening and the VGTR has played a key part in driving it.’

The VGTR means that games businesses are incentivised to stay in the UK to make their new game, or relocate from other countries, with a number having already relocated development activity from the US, China and other locations, the firm said.

Report by Pat Sweet