Plus Accounting ensure local games industry gets a high score

Now in its sixth consecutive year, Brighton Digital Festival brings together the local cultural and digital communities. Both of these sectors represent significant drivers in the local economy, so this multi-media event shines a spotlight on their work and celebrates all things digital. This season is preceded by a special launch party on Weds 31 Aug at Fabrica Gallery, where guests will get a taste of what’s to come, get inspired, get involved and meet some of the talented behind the festival. The event is being sponsored by Vodafone and Plus Accounting, a chartered accountancy firm who have been helping the local games developers obtain some welcome tax relief.

For several years there has been a generally accepted strategy for the most tax efficient remuneration for owner-managed businesses. This includes paying a salary to the director of approximately £8,000 per annum and topping their income up with dividends, paid to them as a shareholder of their company. Previously this income would enable the owner to withdraw circa £38,000 per annum tax free from their company. However, as a result of the introduction of the changes to tax on dividends, a similar method of remuneration from the tax year 2016/17 will result in a personal tax liability of around £1,700 per annum.

However, April 2014 saw the introduction of Video Games Tax Relief (VGTR). This generous relief enables developers to obtain an additional deduction of qualifying expenditure against their taxable profits providing corporation tax relief. Where the deduction creates a loss, this can be surrendered for a repayable tax credit.

The qualifying expenditure for VGTR includes salary, but does not include dividends. As a result, the value of the tax relief is diminished where directors pay a small salary. Developers should therefore be asking their accountants to consider whether a higher salary would be more beneficial. It can be shown in many circumstances that with VGTR a higher salary and lower dividends could be paid, which maintains the same net take home for the director, but increases the net value of the company overall.

To further cement their relationship with the local digital community, Plus Accounting are heavily involved with Brighton Digital Festival. Uniquely reflecting the spirit of the city, the event promises something for everybody. From bleeding-edge technology and ideas, to large-scale playable art works that span the city, September will offer something to suit everyone.

Brighton Digital Festival comes to venues across Brighton & Hove from Thurs 1 – Fri 30 Sept

For more information about VGTR, head HERE

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