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UK chancellor confirms tax relief for games

UK chancellor confirms tax relief for games

Wed 21 Mar 2012 1:14pm GMT / 9:14am EDT / 6:14am PDT
PoliticsDevelopment

15m relief for games in 2013-14, 35m in 2014-15; TIGA, Rebellion, Square Enix, Denki, Relentless, Double 11 and more praise move

The UK chancellor George Osborne has confirmed that the videogame industry is to receive some form of tax relief.

Speaking in today's budget, he acknowledged the need to "support our brilliant video games and animations industries"

"Following consultation on the design, the Government will introduce corporation tax reliefs for the video games, animation and high-end television industries from April 2013, subject to State aid approval," read the official budget report.

The report puts the relief for video games at 15 million in 2013-14, and 35 million in 2014-15. Relief for the years following are not listed.

UK trade association TIGA, which has long campaigned for tax credits said the news is "terrific" for the regions development sector and help contribute UK GDP by 283 million.

"Tax relief for the video games sector will increase employment, innovation and investment in the UK video games industry," said TIGA CEO Richard Wilson.

"Our research shows that Games Tax Relief should generate and safeguard: 4,661 direct and indirect jobs; 188 million in investment expenditure by studios; increase the games development sector's contribution to UK GDP by 283 million; generate 172 million in new and protected tax receipts to HM Treasury, and could cost just 96 million over five years. Tax breaks for games production will ensure that the UK remains at the forefront of video game development. It will also help to rebalance the UK economy away from an over-reliance on financial services towards a high skill, R&D intensive and export focused industry."

Jason Kingsley, CEO of developer Rebellion and chairman of TIGA added: "It will save jobs and companies, promote growth, build financial confidence and bring in much needed export income from around the world. It is exciting that they have made such a positive move and we look forward to working with them on the details of implementation."

Colin Anderson, MD of Dundee studio Denki said the move "will stimulate much needed investment and innovation in one of the UK's leading knowledge based industries," while co-founder of Bossa Studio, Imre Jele added that "This tax credit will reduce the cost of games development, allowing us to hire more staff, invest more in our industry and create more games. It is good for the games industry and good for the UK economy."

Bobby Kotick, CEO of Activision Blizzard, added that "this is a great first step and should put the UK in a stronger position to compete with other countries offering incentives for videogames production. The UK is an important centre for development talent, employing 9,000 people in the videogames sector, and anything that promotes further investment should be welcomed. "

More reactions from UK development heads follow:

Gareth Edmondson, TIGA Vice-Chairman and Managing Director, Thumbstar Games (Newcastle): "I am delighted the Coalition Government has finally backed TIGA's call for Games Tax Relief. This is a real triumph for UK developers. It will enable the UK games industry to remain a success story."

Philip Oliver, CEO Blitz Games Studios (Warwickshire): "TIGA has worked tirelessly to raise the profile of our industry in political circles and today's decision is proof that this campaign has paid off. It is fantastic that the Government is supporting TIGA's Games Tax Relief and we are sure that this measure will grow the industry, create more jobs and lead to higher tax revenues for Government in the future. It is a great result for the games industry and for the UK economy."

Phil Rogers, president and CEO of Square Enix Europe: "This is great recognition for the videogame industry and a big step forwards for games development in the UK. We know we have some of the World's leading talent in this country and this commitment from the government should help to stimulate further investment and opportunities here. Over the past few years a lot of people have put a lot of work into getting this result, and it's great to see that effort starting to pay off."

KarlHilton, MD, Crytek (Nottingham): "This is the right decision for the future of the UK games industry and consumers across the world who enjoy playing British made games. TIGA's victory will enable the UK games sector to compete on a more even playing field. It will also promote the creation of high skilled jobs, enhance investment and stimulate an export focussed industry."

Patrick O'Luanaigh, CEO, nDreams (Farnborough): "The Government has made a wise investment by committing to TIGA's Games Tax Relief today and the whole of the UK industry will applaud them for this decision. TIGA has fought a great campaign on behalf of UK developers and digital publishers. With this result, the UK video games industry should attract more investment and will create more high skilled jobs."

Andrew Eades, CEO of Relentless (Brighton): "UK developers have been competing on an uneven global playfield. Today's decision by the Government to back TIGA tax break campaign will help ensure that we can remain competitive in the global market."

Lee Hutchinson, CEO, Double Eleven (Middlesborough): "The UK video games industry is one of the most creative and innovative in the world. This decision will mean we can continue to invest in UK talent, invest more in our studios and create more highly skilled jobs. This is a great day for games developers. It is also a major achievement by TIGA"

43 Comments

Martyn Brown
Managing Director

137 33 0.2
Has an actual tax break been given and announced or just that the chancellor has acknowledged that it needs to be supported - which appears to be my understanding?

I read somewhere that R&D tax credits have risen, which is good news.

Posted:2 years ago

#1
Martyn, he said measures were being announced, but didn't give details. Presumably the final budget report will have some further information. He said measures would also be introduced for TV production too. He made reference to the film credits, so I assume it'll be along those lines, but we'll see.

Edited 1 times. Last edit by Fran Mulhern on 21st March 2012 1:35pm

Posted:2 years ago

#2
All in all, this is a great opportunity to establish a beachhead of support to improve our gamking development lot in UK, and expand with multiple pockets of Silicon UK hubs

Well done TIGA and all involved! We're now all in it together!

Posted:2 years ago

#3
http://cdn.hm-treasury.gov.uk/budget2012_chapter1c.pdf

More info here at 1.224. Corporation tax relief to be introduced "from April 2013" subject to state aid approval and consultation.

Posted:2 years ago

#4
And from:

http://cdn.hm-treasury.gov.uk/budget2012_chapter2.pdf



That's all I can find quickly.

Posted:2 years ago

#5

Bruce Everiss
Marketing Consultant

1,692 594 0.4
Well done Ed Vaizey for supporting this.
Well done Richard Wilson for his relentless campaigning.

Now will all those developers come back from Canada?

Posted:2 years ago

#6

Bruce Everiss
Marketing Consultant

1,692 594 0.4
Ever since Gordon Brown blamed video games for knife crime it has been difficult to take the government's attitude to us seriously. We are a significant part of the economy and a major element in popular culture so we deserve better. Now we seem to be starting to be taken a little more seriously. About time too.

And I bet that Keith Vaz is choking with fury.

Posted:2 years ago

#7

Kingman Cheng
Illustrator and Animator

949 166 0.2
TIGA TIGA burning bright. :)

I was quietly sceptical especially after those pre-election vows but either way it's a step in the right direction!

Posted:2 years ago

#8
Mind you we have to continue lobbying hard till it is worked out and confirmed in a 2013 budget. But this is a great opportunity to put aside clanish differences for the greater good of UK plc (gaming)

Posted:2 years ago

#9




"expenditure incurred on filming activities (pre-production, principal photography and post production) which take place within the UK, irrespective of the nationality of the persons carrying out the activity."

Presumably, then, a similar provision for games would encourage studios to bring art production back to the UK instead of having it done overseas. And note I say back to the UK, and not back inhouse - presumably if work is given to the likes of Atomhawk or Pitbull, that would qualify, but work given to outsourcing partners overseas won't.



Plus, with R&D credits etc, any total help wil probably amount to more than the baseline tax breaks figures.

Now would be a good time for outsourcing managers and studio owners to make sure they're well acquainted with the likes of the above mentioned Atomhawk and Pitbull! :)

Edited 1 times. Last edit by Fran Mulhern on 21st March 2012 2:50pm

Posted:2 years ago

#10

Andreas Gschwari
Senior Games Designer

556 607 1.1
I guess i am in the minority on here who thinks this is pointless.

This is nowhere near the level of Canadian tax relief, nor will it help the UK to compete with development costs in eastern europe and asia.

This money should be purely used to help new and starting companies to get off the ground - hopefully tax relief won't go to established studios and large publishers - if it does, it will only serve to increase profit margins.

I doubt this will mean adequat salary reviews and proper working conditions for employees. I doubt that this will stop the brain drain from the UK.

Posted:2 years ago

#11
Andreas, that's a good point - and you're not the only one thinking it.

Re not being near the level of Canadian studios, let's wait and see what the consultation brings. And don't forget R&D credits. I'm not sure how many studios will be within the new enterprise zones (or can move there), but that may another source of help. And there's probably other stuff too.

Re your point about going to new studios, that's a REALLY good point - I remember someone saying to me a while back that, in their opinion, all that would happen with tax breaks was that studio owners would pocket the additional as profit. Time will tell, I suppose.

Posted:2 years ago

#12

Andreas Gschwari
Senior Games Designer

556 607 1.1
I just don't see the big hitters like EA, Ubisoft or Eidos relocating entire development teams (or creating new ones) to the UK based on this. They have it cosy in Canada and Asia and if they need to add more production capacity, that's easier done there, where the entire infrastructure is already in place.

i honestly think TIGA's estimate of 4600+ jobs created with this amount of money is fantastical and wishful thinking. Maybe i am just too negative on this, and i'd be happy if i was proven wrong.

Posted:2 years ago

#13
Yeah, but it's not 4600 created - it's created and safeguarded. Still looks good in the headlines, but a subtle difference;)

I don't think you're being negative, I think you're being somewhere in between realistic and cynical. You might be right, but we'll have to wait and see:)

Posted:2 years ago

#14

robert troughton
Managing Director

219 93 0.4
http://www.bbc.co.uk/news/entertainment-arts-17461121

Lots of talk of Wallace and Gromit and a minor mention of video games... figures...

Posted:2 years ago

#15

robert troughton
Managing Director

219 93 0.4
By the way, thanks for the mention Fran :-)

Posted:2 years ago

#16
You know me sweetheart!

Posted:2 years ago

#17
I mean, Bob:)

And yeah, saw that BBC article. Disappointing, but there we go.

Edited 1 times. Last edit by Fran Mulhern on 21st March 2012 3:31pm

Posted:2 years ago

#18
I am not sure how it benefits art production studios like ourselves...
I am guessing its the final print and details whereby SMEs and developers get tiered tax breaks?

Posted:2 years ago

#19

Kingman Cheng
Illustrator and Animator

949 166 0.2
Maybe with more start ups, we'll potentially have bigger companies in future who will turn to you guys Dr. Wong? :)

Posted:2 years ago

#20
No idea - I do know in 2010-2011 that there was a great amount of start up following many closures and by 2013, most will be approaching their 2-3rd year of being a SME whereby survival after the 3rd year tends to herald a stable and long lasting promising business

As such, these tax break should tiered to both help startups and established developers (and overall this will bring in incentives for various game hubs to flourish IMHO)

Posted:2 years ago

#21

Anthony Gowland
Lead Designer

176 559 3.2
Middlesbrough only has one 'o' in it :)

Posted:2 years ago

#22

robert troughton
Managing Director

219 93 0.4
Well, I'd hope that any breaks offered really do stay within the UK. What I'd hate to see would be foreign-owned mega studios getting tax breaks so that they can make games here cheaper - and then paying tax on their profits in their home country. Sure, it creates jobs for as long as the tax breaks last - but it doesn't create any real value in the studio.

I've said for a long time that any financial help should be used to the proper benefit of UK owned studios. That way, at least, perhaps we can later repay the tax payer for their help.

Also, it's been predicted for a very, very long time that games development would move to a more film-like fashion with smaller teams and companies being contracted to take on different aspects of development... be that concepting, art production, technology, AI and Game Mechanics, Audio or whatever... it doesn't make sense for studios to continue tackling all of this themselves any more. Lets keep that work within the UK with specialist teams.

Posted:2 years ago

#23
Chee, if it only applies to UK expenditure, then presumably you'll be able to say to studios "if you use us rather than an Indian/eastern european/Vietnamese/Chinese studio, you can put the cost towards your tax credits".

Posted:2 years ago

#24

Kingman Cheng
Illustrator and Animator

949 166 0.2
That's true Dr. Wong, there were quite a lot of start ups back not long ago...

Either way the key we need to keep the work within the UK, that'll go without saying. Still I'm a bit sceptical that we're going to see some significant change but every little counts for now?

Posted:2 years ago

#25
@ Fran - I am guessing we will have to await the really fine print to see how that works out. Nevertheless from now till being able to enact full legislature, there will be undoubtedly lots of lobbying and horse trading!

Ideally, I would like for it to be kept within UK. i.e studios receiving the grants have to us UK based workforce and not re-outsource to externals (which I guess is what everyone here is saying)

Posted:2 years ago

#26
I've seen a lot of individuals within the industry celebrating this announcement. The news is good even if it is a small step from an industry perspective. But my question is why are individuals celebrating this announcement so much? If I'm understanding correctly it's for the good of the industry and to encourage more hiring within the UK. Individuals already in work within the UK won't see the effect of this news in anyway. Correct?

Posted:2 years ago

#27

Simon Gardner
CEO

3 0 0.0
I doubt any studios will be getting "grants". It will stimulate growth in the UK through incentives to invest or tax breaks on profits down the line.

Posted:2 years ago

#28

Robert Watson
Senior Game Designer

4 13 3.3
A great step forward for the UK games industry in particularly tough times and has worked wonders for Canada. I was disappointed though that there was no information about education. Surely it would make sense to spend some money on producing good graduates that are well prepared for work in the industry rather cutting education budgets and staff left and right.

Posted:2 years ago

#29
Elliot, not really. hopefully it will attract new projects, but also help safeguard existing projects and studios as those projects become cheaper.

And from an individual perspective, additional projects and studio growth will give you guys more options if you're looking to change jobs, etc.

Posted:2 years ago

#30
Well done TIGA - persistence pays off in the end.

Posted:2 years ago

#31

Kieren Bloomfield
Software Engineer

92 79 0.9
@Bruce "Now will all those developers come back from Canada?"

No. Not happening. It's too nice here. It's about a lot more than the job and the salary. Why don't people understand this?

Posted:2 years ago

#32
It'll bring in money to the Games Industry that we can then immediately spend on private health instead, it's offered by the same government who are effectively privatising the NHS after all.

Edited 1 times. Last edit by Steven Taylor on 21st March 2012 6:33pm

Posted:2 years ago

#33

Richard Gardner
Artist

123 32 0.3
I honestly don't understand peoples excitement and negativity, they haven't even announced what the tax breaks will actually be... They could be absolutely amazing or a complete waste of time. Not to mention these plans are to be implemented in 2013 so their is plenty of time for the government to kick us in the face again.

It will be a waiting game to see how they actually turn out, until I know details I'm not really feeling anything other than hope.

Posted:2 years ago

#34
@ Richard Maybe (hope) is far better/positive than never (the govt stance so far). People aspire and need hope, thus the almost uniformal seachange of reaction. For with hope they can dream, they can utilize this like some hidden starter gun to build a home/nest for themselves, that even if it hasnt been set in stone - afford themselves to take the gamble on some hope, it will be good.

Posted:2 years ago

#35

robert troughton
Managing Director

219 93 0.4
For my own studio, done right, the tax breaks could be a huge help. But, that said, the last couple of years, with very little help from the government (we've had a few very small grants from our local council for capital purchases), we've learnt to work very efficiently and frugally - we had to if we were going to survive. To come through this period, to survive when Canadian studios have had the benefit of huge breaks, has only made us stronger.

I heard recently of a Canadian studio that was on the verge of collapse - they'd had the benefit of 40% tax breaks, a huge influx of UK technically and artistically brilliant people, a fantastic IP to work on... and they -still- hit trouble.


For a UK studio to compete on an uneven playing field, we've just had to learn to play harder, work harder and make less mistakes. But you know what happens when people are running uphill and then, suddenly, that hill levels out?...

Posted:2 years ago

#36

Adam Campbell
Associate Producer

1,153 934 0.8
Its a step in the right direction and necessary. Its only so long a country can let its biggest entertainment industry remain uncompetitive in this area. May not be as big a tax relief as some countries but its a start.

Posted:2 years ago

#37
@Steven Taylor - you sound like a Guardian reader! I bet you enjoyed their editorial today:

"that proclaimed tax simplification even while bringing in tax relief for the makers of Grand Theft Auto. Most of all, it does not forgive a budget that was, politically at least, redistributive in just the wrong direction: taking from the poor to give to the rich."

Posted:2 years ago

#38

Rolf Moren
Freelance Marketing Consultant

36 22 0.6
Im not quite sure how the UK government will be able to do this since this kind of support for an industry usually is forbidden in the EU regulations. These kind of measurements is usually used for support in certain geographical areas that are under developed and the measurements are agreed upon in the EU.

Posted:2 years ago

#39

Andreas Gschwari
Senior Games Designer

556 607 1.1
@Rolf agreed. I think that this EU regulation is one of the reasons why the France tax break for the games industry is set to expire

@Richard: you make it sound as if reading the Guardian is a bad thing...

Posted:2 years ago

#40
The main thing that is really challenging in the field at the moment is currency exchange rates. As a outsource specialist we had in our first 4 years 80-90% of work from overseas clients. As Robert of pitbull mentioned, one had to work harder, slip up less and fight competitively tooth and nail without nary a chance of a local grant/help or loan to build up a organic business and survive through the 2008 global depression as well.

It certainly put a fire in ones belly, and one aspect a games tax relief can help especially for SMEs is a reduction in employers NI contributions as a start

Posted:2 years ago

#41

Darren Adams
Managing Director

231 409 1.8
I take things as they come with this and agree with certain comments about the cash only going to the big companies. I run a small development studio and have gone for R&D tax relief before and it only really worth doing if you are employing lots of people. Micro studios that only have 2-10 people are not going to benefit, so as said I will wait and see what these tax benefits really mean.

Suppose it is a good start at least.

Edited 2 times. Last edit by Darren Adams on 22nd March 2012 2:26pm

Posted:2 years ago

#42

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