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Government adopts TIGA's tax relief plan

Update: Games must pass cultural test before paying less tax on profits; Wilson hails "decisive breakthrough"

The UK government is to adopted TIGA's videogame tax relief plan, offering financial incentives to regional companies that create games that adhere to a cultural criteria.

Revealed today by the chancellor Alistair Darling after extensive lobbying by TIGA, developers that create profitable games will be able to use the relief to pay less tax on profits, while unsuccessful games will be awarded a cash tax credit to reduce losses.

"Games tax relief will increase employment, investment and innovation in the UK videogames sector," said TIGA CEO Richard Wilson. "Our research shows that games tax relief over a five year period should create or protect 3,550 graduate level jobs, increase or safeguard £457 million in development expenditure and encourage developers to adopt new business models and create new intellectual property.

"Games tax relief will ensure that the UK remains a world leading developer of video games. Games tax relief is good for the UK video games industry, good for UK consumers and good for the UK economy."

For companies to qualify, they must fall within the scope of UK corporation tax and pass a cultural test scoring against a criteria that looks at European heritage, languages, game locations, innovation, narrative and the location of the development and development staff.

Speaking to GamesIndustry.biz, Wilson explained that the next step is for the government to work with the games industry to establish a board which can independently judge and apply the cultural criteria to games.

"As the UK emerges from the recession, we need to rebalance the economy away from an excessive dependence on financial services and public sector employment. We need to promote export oriented, high skilled, knowledge based business sectors of the economy, such as the videogames industry," added Wilson.

"Videogames are the Hollywood of the 21st century. With games tax relief in place, the UK is guaranteed a leading and successful role."

He added: "For games tax relief to be announced in the budget is the decisive breakthrough that TIGA has campaigned for. 

"Ministers have made the right decision at the right time for the right industry. Government ministers are to be warmly congratulated for their visionary decision. TIGA now looks to the opposition parties to give their full support to games tax relief in the Finance Bill."

"The UK video games industry is one of the most creative and innovative in the world," he said. "This decision will mean we can continue to invest in UK talent and prevent brain drain to our overseas competitors. This is a great day for Scottish and UK-wide developers. It is also a major achievement by TIGA."

UPDATE: ELSPA has issued a statement saying it is "delighted" with the budget news, and that it intends to work with the government on pushing game tax relief forward over the coming months.

"We look forward to examining the details of these proposals and ensure that the measure is designed and implemented to support the largest number of businesses in the UK," said Michael Rawlinson, director general.

"ELSPA is ready to work alongside key stakeholders and take a full and active role to deliver for the computer games industry as a whole."

Andy Payne, chairman of ELSPA, added: "The UK computer and videogames industry, ELSPA and TIGA, have been in discussions with Government for the last four years to examine ways that we can work together to capitalise on the wealth of talent and significant provenance here in the UK.

"It is absolutely heartening news to hear that the Chancellor has offered support for one of the country’s leading creative digital businesses. This is a very significant day for the computer and videogames business in the UK."

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Latest comments (13)

This is a good first start into the discussions to make UK more competetive globally. Good job TIGA. Now keep the pressure on!
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Well done to TIGA and all of us that have constantly pushed to make them listen. I hope the implementation is fast and not bureaucratic. We look forward to more details and to having all the UK dev industry benefit from it.
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Chris Powell Studying Computer Science, University of East Anglia6 years ago
Excellent news to read just as I prepare to venture out from university and into the industry!
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Jay Crowe Studying Information Technology, University of Glasgow6 years ago
This news will largely be met with both the cynicism of a disillusioned electorate - wary of juicy tax breaks dangling from fishing rods - and a genuine sense of cautious optimism, at very least, in regard to the recognition of the importance of investment inthe sector within the context of a highly competitive global industry.

I fear that the implementation will be neither fast, nor free of the strangling tentacles of central government red tape. I also can’t help but note that the big swinging hammers of the industry have ‘been in discussions with Government for the last four years’.

This is not a static playing field; to compete, investment and agility are essential. Similarly, despite the support of Ed Vaizey, the prospect of an ‘emergency budget’ – in the event of a Tory government - or a Labour ‘pre-budget review’ post election does not bode well -or am I being overly pessimistic?

There are reasons for optimism; steps towards expanding the industry should be welcomed with open arms (if suspicious minds). There is little point churning out thousands of skilled graduates if there is no capacity. Personally, I've had to leave the UK to secure employment in the sector. If financial tools become available and are leveraged properly; if innovation and technical excellence are encouraged and sustained, yes: UK computer game companies will prosper.

..So why can I not help but feel that there is still a “yes... but” lingering in the air?
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Congratulations to TIGA and especially to Richard Wilson whose singular focus on winning this important issue has now provided dividends. The devil may be in the detail but the 24th march 2010 is a date to remember.
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Tameem Antoniades Creative Director & Co-founder, Ninja Theory Ltd6 years ago
Well done TIGA! It's a major step forward that you have achieved on our behalf. I have a little more faith in government because of this.
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Kingman Cheng Illustrator and Animator 6 years ago
Fantastic job Tiga, keep up the good work!
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Hats off to Richard, Jason and the TIGA team. Great news for the UK games industry. I for one will do everything I can to help the consultation process chaps. BRILLIANT.
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Phil Stilgoe Operations Director, Centroid 3D6 years ago
Great job TIGA! This is spendid news for the UK's Games industry but will it encourage UK developers to outsource more in the UK? Sadly not..
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Fran Mulhern , Recruit3D6 years ago
Actually, Phil, it just might.

If part of the "culturally British" test involves whether the title is produced here (which it does), then points might be deducted if a significant part of the production is done overseas.

Who knows.
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Phil Stilgoe Operations Director, Centroid 3D6 years ago
Thanks Fran! It's all encouraging stuff and everything has to start somewhere, but lets hope some of the benefits will be felt further down the food chain.

Edited 1 times. Last edit by Phil Stilgoe on 25th March 2010 5:22pm

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Fran Mulhern , Recruit3D6 years ago
Yeah, let's hope so. I know a fair few people who set up their own outsourcing studios here but have seen a lot of the work shipped offshore.

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The question is really if internal outsourcing within UK will be on the up, as part of the test *grin*

VAT is a real psychological barrier, even if its all eventually claimed back from the taxman
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