UK government to "review evidence" for tax credits

The UK government has issued an official response to a petition on the Prime Minister's 10 Downing Street website stating that it "takes seriously" the role that the videogames industry plays, and that it is currently reviewing evidence for introducing culturally-influenced tax breaks following a recent decision in France.

"The government takes seriously the contribution of the UK's creative industries to the economy and to the UK's cultural richness. Creative Britain - New talents for the New Economy, published earlier this year, set out the 26 commitments with which the Government would support the creative industries," said the statement.

"In that document, the Government committed to making sure that the creative industries, including the games sector, were aware of and made the best use of the generous Research and Development tax credits for small and medium-sized enterprises, introduced by the Government in 2000. The Government has already been promoting the credit within the industry.

"The Government must be mindful of the need to ensure fair competition and value for money for tax payers whilst ensuring that any tax incentives are supported by evidence. The Government is conscious of the recent approval of a cultural tax relief for games in France and is working with the UK industry to collect and review the evidence for introducing such a credit in the UK."

While the statement doesn't commit to anything specific, it is an indication that the issue has been noted - which will be of interest to UK developers, for whom the country is fast becoming one of the most expensive territories to work in, especially when compared to incentive-laden countries such as Canada.

The original petition text as published on the government website, which was signed by over 2100 people, is as follows:

"We are looking on in horror as flagship UK company Eidos who created the iconic Lara Croft, is facing problems of competing in a global environment. The UK games industry requires tax incentives or some other assistance to maintain a competitive market for global publishers.

"According to Tiga, the trade association for UK developers, the number of independent studios has shrunk from about 400 in 2001 to 150 today. Much of this is because publishers such as Ubisoft of France, Sony of Japan and EA of the US have purchased the high performing studios.

"It is evident that studios based elsewhere are making efforts to extract what grassroots talent the UK has. The FT wrote in 2007 Montreal is offering to pay about 40 per cent of the salaries of the SCi developers and to give them a tax holiday. Such grants have enticed global publishers, such as EA and Ubisoft, to set up in the city.

"We need the same to support UK talent in this industry that is expected to grow phenomenally in the next 3 years, but with rising costs in development more staff are required and it is increasingly less attractive to fund these larger projects here, and almost impossible for independent studios to start production."