CREC092300 - Commencement and transition: European to UK expenditure (video games)
Minimum expenditure condition
If a video game previously claiming Video Games Tax Relief opts in to VGEC in an accounting period before the completion period:
the European expenditure condition in section 1217EB CTA 2009 is to apply as if the video game had been completed in the period immediately before the opt in period, and
the UK expenditure condition in section 1179FH CTA 2009 is to apply only in relation to core expenditure incurred in the opt in period and subsequent periods.
Example
Company A is developing a video game. The company first claimed under VGTR in its accounting period beginning 1 July 2022, and opted in to VGEC in its accounting period beginning on 1 July 2024.
By 1 July 2024, Company A had incurred £80,000 core expenditure. Since then, it has incurred a further £20,000.
The European expenditure condition under VGTR applies only to the £80,000 core expenditure incurred before Company A opted in to VGEC. The test is met as long as Company A had incurred £20,000 European expenditure (25% of £80,000) on the video game before 1 July 2024.
The UK expenditure condition under VGEC applies only to the £20,000 core expenditure incurred since Company A opted in to VGEC. The test is met as long as Company A has incurred £2,000 UK expenditure (10% of £20,000) on the video game since 1 July 2024.