Exclusive:Scots firm Rockstar North behind Grand Theft Auto games claim £73m in tax relief amid record dividends

Rockstar North, the developers behind the critical and commercial blockbuster game series Grand Theft Auto, is putting the finishing touches to the latest instalment in a franchise that has sold more than 435 million copies around the world.

The extraordinary success of the action adventure series has allowed the Edinburgh-based firm, widely regarded as one of the world’s foremost game producers, to generate vast sums of money. Since the release of the last game in the series 12 years ago, it has generated profits of more than £521m, and paid out more than £317m in dividends.

Over the same period, it has claimed more than £433m via a Treasury initiative designed to support a British games industry that is primarily made up of small and medium-sized firms.

The extent of the company’s use of the Video Games Tax Relief (VGTR) scheme was first detailed in an investigation by The Scotsman last year. There is no suggestion of illegality in the firm’s tax relief arrangements, but it has drawn criticism from tax campaigners.

Claire Aston, director of TaxWatch, a charity and investigative think-tank that conducts research and analysis on tax avoidance, tax policy and tax law, said: “VGTR was introduced to support the development of culturally British games that would struggle to obtain financing. It has now evolved into a lucrative tax break exploited by multinational giants like Rockstar, who claimed £73m in public money while simultaneously paying out £132m in dividends to their overseas owners in their most recent accounts.

“The company's total claims of £433m since VGTR began reveal how a cultural support program has been transformed into just another tax avoidance mechanism for highly profitable companies developing games that would be made regardless of government support.”

As well as detailing the £73m claimed in VGTR in the 12 months to March 31, 2024, Rockstar’s latest accounts also point out the firm received interest income of £1.6m in 2024 pertaining to “the interest income on late payments from HMRC for the VGTR credits”.

Companies which qualify for VGTR are able to claim back 20 per cent of their production costs during a game’s development. When the scheme was introduced in 2014, the-then chancellor, George Osborne, pointed out 95 per cent of UK game developers were SMEs. He said the tax relief would “help them to grow”.

The latest HMRC data, covering the 2022/23 financial year, shows there were 525 claims totalling £281m. Rockstar claimed £75m in VGTR during that period.

Robert Palmer, executive director of the campaign group Tax Justice UK, said: “Grand Theft Auto is a blockbuster video game. It's extremely profitable and Rockstar has paid out millions in dividends. It's unclear why Rockstar needs such a substantial public subsidy when the demand for public money is so great.

“NHS waiting lists are long, our roads are covered in potholes and public services are creaking. The Treasury should carry out a full review of these sorts of tax subsidies to make sure that we're getting value for money.”

The Treasury does not comment on the tax affairs of individual companies, and Rockstar and Take-Two declined to comment. The firms have previously pointed to how VGTR has been “instrumental” in fostering career opportunities. The average monthly number of employees at Rockstar’s Edinburgh offices increased from 1,554 in 2023 to 1,658 in 2024.

Even though nearly seven years have passed since the release of Rockstar’s last title - the western epic, Red Dead Redemption 2 - its latest accounts filed at Companies House show the firm is generating vast revenues by providing research and development work for its parent company, US-based Take-Two Interactive.

It posted record turnover of £521m, the third successive accounting period in which its turnover exceeded half a billion pounds, with a note in the accounts pointing out that turnover “is mainly driven by the recharge of research and development services to Take-Two Interactive”.

The new accounts detail post-tax profits of £72m, with the operating profit of £16.4m also representing an all-time high for the company, which began life as DMA Design, a modest development studio based in Dundee. The company also claimed more than £622,000 in research and development expenditure credits, another UK tax relief scheme.

Developers in Rockstar’s Holyrood Road offices are putting the finishing touches to Grand Theft Auto VI, which is scheduled to be released this autumn. Video game industry analysts, DFC Intelligence, predicted last month the game will generate sales of around £2.57 billion in its first year, making it one of the biggest launches in entertainment history.

Even though the last GTA game was initially released in 2013, the franchise continues to serve as a major cash cow for Rockstar and Take Two. It has sold more than 205 million copies around the world and is still in demand. Indeed, in the six months to the end of September last year, sales of GTA products generated nearly 13 per cent of Take Two’s overall net revenues of £1.9bn.

The financial success of the GTA titles has helped to attract major investors in US-based Take Two. Filings with the US Securities and Exchange Commission show that leading asset managers, the Vanguard Group and Blackrock, are the two single biggest holders of the firm’s common stock, closely followed by the Saudi Arabian Public Investment Fund. Cumulatively, they hold nearly a quarter of the company’s shares.