Corporation Tax Act 2009 section 1179FJ

Expenditure that qualifies for credit

Section 1179FJ defines which expenditure incurred by a video game development company counts as "relevant production expenditure" for the purpose of calculating the Audio-Visual Expenditure Credit.

• Expenditure must be incurred by the video game development company itself to be considered for the credit.
• The expenditure must be "core expenditure" — meaning it relates directly to the design, production and testing of the video game.
• The expenditure must not be "excluded expenditure" — which covers spending already relieved through R&D tax relief or spending arising from non-arm's length transactions with connected parties.
• Only expenditure that satisfies both conditions (core and not excluded) qualifies as relevant production expenditure for calculating the credit.