Government adopts TIGA's tax relief plan

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."