M&A and investment in the game sector Tax or promotional purposes, or anything widely drawn and can encompass, produced for the purposes of gambling. for example, projects that seek to VGTR is being replaced by achieve an advance in science and VGEC which, instead of an technology or address technological additional deduction from profits or or scientific certainties. This can surrendering a loss for a tax credit, include the development of games will provide a taxable above the and game platforms, depending line tax credit based on qualifying on the nature of the research and expenditure. VGEC will come into development being undertaken. force from 1 April 2025, after which all The amount of relief available will new games will have to claim VGEC depend on which of the two research rather than VGTR. Any games under and development relief schemes development before 1 April 2025 will the company qualifies under: the be able to continue to claim VGTR scheme available to SMEs (small until April 2027. Companies are or medium sized enterprises) or an able to claim VGEC by election R&D expenditure credit (previously for certain projects with effect primarily for large companies). from 1 January 2024. From 1 April 2024, a new simplified Research and Development R&D tax relief combining the two Tax Relief existing schemes has applied (offering a 20% ‘above the line’ R&D The UK offers specific incentives expenditure credit). However, the through the tax system to encourage enhanced relief for loss-making UK resident companies, and non- R&D intensive SMEs will continue UK resident companies which have to be provided under the existing a UK permanent establishment SME scheme (but with a reduced (eg a branch or an agency), to qualifying expenditure threshold). undertake innovative research and development projects in the UK. Claims for relief under either scheme are made in the company’s UK Research and development is corporation tax return. 33