UK Video Games Tax Relief comes under fire for mostly going to triple-A companies

UK Video Games Tax Relief comes under fire for mostly going to triple-A companies

The UK's tax relief for video games has come under fire with an overwhelming number of claims apparently being given to the bigger companies.

That's according to a new report from The Guardian, which says that "at least 80 per cent" of the total amount given out are for claims of £500,000 ($614,571) or more, mostly going to big triple-A companies. Meanwhile, more than half of successful claims are for £50,000 ($61,457) or less, clocking in at around £10m ($12.3m). To date, £324m ($398m) has been dolled out.

The report claims that international companies including WarnerMedia, Sony and Sega have raked in millions through the UK's video games tax relief.

The former - through developers Traveller's Tales and Rocksteady under its Warner Bros Interactive Entertainment arm - has apparently claimed £60m ($xxxm) in tax relief, while PlayStation maker Sony has asked for £30m ($36.9m). Meanwhile, Sega's Creative Assembly and Sports Interactive studios has claimed against £20m ($24.6m).

This follows revelations from think tank TaxWatchUK that Take-Two Interactive claimed £42m ($xxxm) in tax relief via Grand Theft Auto V maker Rockstar North.

How effective tax incentives like VGTR are is up for debate. Introduced in 2014, part of the objective behind the UK's video games tax relief was to attract talent to the country while keeping the companies and employees that were already here.

One of the arguments was that regions such as Canada were proving more attractive due to its tax relief schemes, which have attracted everyone from Ubisoft to Square Enix to Warner Bros. That's in addition to assisting smaller studios with their development budgets.

While it's unsurprising that bigger companies are taking the lion's share of tax relief. The amount given to a company in tax credits is 20 per cent of a game's budget, with more money being ploughed into larger triple-A projects thus more tax relief.

What likely needs to be reviewed is how companies are given tax relief. Right now, suitability for being part of the financial incentive scheme is based on a test run by the British Film Institute (BFI) which determines its cultural worth.

PCGamesInsider Contributing Editor

Alex Calvin is a freelance journalist who writes about the business of games. He started out at UK trade paper MCV in 2013 and left as deputy editor over three years later. In June 2017, he joined Steel Media as the editor for new site In October 2019 he left this full-time position at the company but still contributes to the site on a daily basis. He has also written for, VGC, Games London, The Observer/Guardian and Esquire UK.