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Tax relief will have no minimum budget

Tax relief will have no minimum budget

Tue 11 Dec 2012 1:11pm GMT / 8:11am EST / 5:11am PST
Politics

Draft legislation outlines tax relief and reveals details of cultural test

TIGA

TIGA is the trade association representing the UKs games industry. The majority of our members are...

tiga.org

UKIE

The Trade association for UK Interactive Entertainment

ukie.info

The treasury has today released its draft legislation which reveals more details about the proposed tax relief for the industry, including that all companies will be eligible for the relief, despite their budgets.

The scheme will also make allowances for post-release expenditure, for instance DLC and ongoing online games.

As well as these initiatives, the document revealed details of the cultural test developers will need to submit each project to in order to qualify.

The test awards points based on things like a game's setting, characters and the location any outsourced work, and a project must achieve 16 points to pass. For example, a game can score 4 points if "at least 75 per cent is set in the United Kingdom or another EEA state" and another point if at least 50 per cent of voice recording is done in the UK. How games with more abstract themes or settings, or those that lack dialogue, can make up for those missing points is not noted.

"It is vital that we properly scrutinise every detail of the legislation to make sure that the final scheme is in line with the needs of our industry"

Dr Jo Twist

The government expects around 300 companies in the UK to benefit from the legislation, although games made for advertising purposes or those with gambling connections will not qualify.

"We're pleased that an initial look at the draft legislation seems to be another positive step for our members and the wider industry, helping us to keep the UK as a leading creative force for games on the global stage," said UKIE CEO Dr Jo Twist.

"It is however vital that we properly scrutinise every detail of the legislation to make sure that the final scheme is in line with the needs of our industry. We need all games businesses to feed-back their thoughts over the next three months so that we can ensure that we have the best possible system operating for all UK games businesses."

UKIE is also calling on the UK industry to join its open sessions in January to discuss the bill ahead of the full consultation on the draft proposal.

TIGA, the UK's other industry trade body, also offered its advice to those hoping to take advantage of the scheme, with CEO Richard welcoming the legislation that his organisation worked so hard to bring about.

"One of TIGA's key priorities has been to ensure that the new Games Tax Relief supports the 'games as a service' business model."

Dr. Richard Wilson, CEO, TIGA.

"This is excellent news for the video games industry," offered Wilson. "The Government has listened to our proposals and adopted the vast majority of our suggestions for the design of Games Tax Relief. TIGA is particularly pleased that there is no minimum spend threshold: this will enable start-up studios and small development businesses with smaller budget games to benefit from Games Tax Relief.

"Additionally, it is excellent that the Government has agreed to allow post-release development expenditure including QA costs to be eligible for Games Tax Relief. One of TIGA's key priorities has been to ensure that the new Games Tax Relief supports the 'games as a service' business model. The Government agrees. This is a good day for the UK games industry."

"It's essential that these tax breaks will work for small start-ups like us too," added Alice Taylor of MakieLabs.

"It will give the UK the level playing field that we need: to be able to bootstrap, to grow, to attract in the right talent, and to build the sort of cutting-edge innovation-led companies that this country has always done so well to produce."

In his autumn statement last week, where he first outlined his plans for the tax relief, Chancellor George Osborne said "following consultation on their design, the government will ensure that the reliefs are among the most generous in the world."

14 Comments

Richard Westmoreland
Game Desginer

138 89 0.6
A step in the right direction! The "Britishness Test" does worry me a little, as I would imagine it will simply lead to very few games qualifying for the tax break rather than more games promoting Britain.

Posted:A year ago

#1

Andreas Gschwari
Senior Games Designer

555 607 1.1
I don't think so Richards. There are a lot of points to be had in total and also consider that it's "UK or EEA" for a lot of the requirements - this opens up for diversity. I think having a set of guidelines like this is good!

Posted:A year ago

#2

Bruce Everiss
Marketing Consultant

1,692 594 0.4
EU rules for cultural resonance. It is a way to try and limit mindless state subsidies. A bit of a laugh really when we pay for the CAP.

Posted:A year ago

#3

Jessica Hyland
Character Artist

237 794 3.4
The test seems easy enough; so long as all of your work is produced in the UK and the game's dialogue is in English(does that test require it to be voice-acted?) you've basically got 15 points already. Set it in an 'undetermined' locale if none of the UK or EEA suits you and you're done.

I wonder if someone fulfilling multiple roles qualifies multiple times under paragraph 6?

Edited 1 times. Last edit by Jessica Hyland on 11th December 2012 3:40pm

Posted:A year ago

#4
Guess if they have a online cultural test facility, that would be the way forward

Posted:A year ago

#5

Jim Webb
Executive Editor/Community Director

2,232 2,161 1.0
It's a great way to astutely handle the tax breaks but it will certainly limit the number of projects that qualify.

Posted:A year ago

#6

Nicholas Pantazis
Senior Editor

1,009 1,401 1.4
Yeah I'm really not a fan of using tax breaks to "guide" the artistic process. :-/

Posted:A year ago

#7

Andreas Gschwari
Senior Games Designer

555 607 1.1
@Nicholas: first of all, nobody has to take advantage of it. If people want to be creative outside of those "rules" they can be. Secondly many larger companies' "artistic" process is guided by sales forecasts and perceived needs from the customer - is that better?

Personally i'd love to design a game around those ideas. In fact i can come up with a few pitches of games that could fit the criteria. it's not really that restrictive at all.

Posted:A year ago

#8

Paul Johnson
Managing Director / Lead code monkey

799 996 1.2
>> "artistic" process is guided by sales forecasts and perceived needs from the customer - is that better?

Well it better be, you can either give customers what they want or make something the customers are gonna hate. Don't see much merit in that latter category for anyone tbh.

I think this qualification system is a bit of a joke. It's better than nothing I guess, but as usual why can't we just have a straight up useable policy in this country. Anything that's open to interpretation is never a good thing, and after acknowledging that this is a creative industry, why would they seek to steer that creativity in a particular direction.

I would like to think that I qualify for something from the UK govt because I'm hard at work making some small tax and employment contribution to the UK, not because level 13 is set in Manchester and a brummy did the voices...

Edited 1 times. Last edit by Paul Johnson on 12th December 2012 8:58am

Posted:A year ago

#9

Bruce Everiss
Marketing Consultant

1,692 594 0.4
The EU was known as the Common Market, and that is its main function. A single market for goods and services, thus vastly increasing efficiency, creating growth and enhancing quality of life.
To make the market work means keeping out distortions such as state intervention. This can lead to subsidy competition such as Canada has engaged in with the video game industry.
So for any state subsidy to be allowed by the EU it takes a lot of justification (except for the Common Agricultural Policy, which is a plain silly concept).
Over the last few months the British government has been in negotiations with the EU about what can be permitted by way of subsidy against the strict rules. So what we have is a compromise that the EU Commission was prepared to allow.
We are lucky in that the French did this in 2008. So we have a precedent in the game industry within the EU to copy from.

Obviously if you don't like the consequences of being a member of the EU club then you can always vote UKIP. :-)

Posted:A year ago

#10

Andreas Gschwari
Senior Games Designer

555 607 1.1
@Paul: that was kind of my point. Artistic process in our industry is, for the most part, always guided by something. In case of many games artistic process is guided by one thing only: Call of Duty (example: Medal of Honor: Warfighter).

I find it so entertaining that people seem to be stuck inside this box and can't even begin to think outside it. These guidelines are so loose. And as Jessica pointed out, getting points is ridiculously easy.

Think about Assasins Creed 2. Set in Italy (EEA member), with an italian cast, main character, recorded in the english language - if the game had been made by a UK team, it would have qualified for tax credits.

Think even MW3: some characters are british, some levels are set in the UK and other EEA countries. Everything is recorded in english. Again, if the game was produced in the UK it would qualify.

Think ME3: make shepard british, some of the other main characters british, produce it in the UK and you get the credits. It's recorded in english and a major part of the end features London.

That's 3 major franchises that, if produced in the UK (and in one case altered slightly) would qualify for the tax credits.

I have never been a big fan of tax credits, because i believe it will largely benefit bigger companies who funnel profits outside of the UK and who produce a lot of content in outsourcing studios across the world. But these rules actually help ensure content is produced in the UK (that's where most of the points come from). True UK developers should be very happy indeed with that.

Posted:A year ago

#11

Paul Johnson
Managing Director / Lead code monkey

799 996 1.2
But if it's as easy as you say to qualify, and tbh I've not looked deeply into this yet, then there seems no point having it in the first place. :)

Posted:A year ago

#12

Andreas Gschwari
Senior Games Designer

555 607 1.1
Well the biggest area, those with the most points, is the area about production being done in the UK. And i think that is the most valid criteria in the first place.

As Jessica pointed out: produce the game in the UK and do it in the english language and you get 15 points. That leaves 1 point from the other criteria.

The way i read the guidelines is like this: Make the game entirely in the UK, produce it in the english language and at least have some kind of UK or EEA location or character in it - then you'll get a tax credit.

To me this is great. Any company aiming for these tax credits will ensure jobs stay (or are created) in the UK.

Posted:A year ago

#13

Paul Johnson
Managing Director / Lead code monkey

799 996 1.2
ok, that sounds a bit more like it, although I wish the "made in the UK" bit was worth 16 points - that's the bit they're supposedly helping with. After all, a USA company (or even another EU country) making games just set in the UK won't be paying tax here anyway.

Posted:A year ago

#14

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