Ask the Experts: I’m creating a new app, are there any enhanced tax reliefs available?

If you’re self employed or operate as a common partnership with other individuals, I’m afraid there aren’t any additional or enhanced tax reliefs available.

However, if you have incorporated your business and operate through a Limited Company, you may be able to access certain enhanced tax reliefs, such as research and development tax credits (R&D) and video games tax relief (VGTR). Both of which could potentially save your business money and even represent cash back under certain circumstances.

Though, as expected with tax legislation, there are some tax technical “hoops to jump through” in order to qualify for and claim these types of tax reliefs. R&D has been covered previously, please refer to the R&D article for further details on R&D tax credits.

In terms of VGTR, this could apply if you’re making a gaming app.  A crucial step is to get certification from the BFI for the game. Following this, if you meet the specific criteria you can save a percentage of your tax based on your expenses, as summarised in a simple illustration below:

If you spend, for example, £100,000 of eligible expenditure, and the entirety of the expenditure qualifies for VGTR, you can claim £20,000 of tax relief. Repayable tax credits may be available if your Company made a loss in the period.

There are restrictions to both R&D and VGTR. Also, you cannot claim both of these types of tax reliefs on the same expenditure.

Like most tax matters, it can be quite complicated. For further information please contact Michael O’Brien at Kreston Reeves, on 020 7382 1820 or via email [email protected].