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Osborne promises "most generous" tax relief for games

UPDATE: TIGA and UKIE respond to 25 per cent games tax relief

Chancellor George Osborne has promised the corporation tax reliefs for the video game industry will be "among the most generous in the world" in his autumn statement today.

"Following consultation on their design, the government will ensure that the reliefs are among the most generous in the world by offering a payable tax credit for all three reliefs worth 25 per cent of qualifying expenditure," said the official statement from the treasury.

The corporation tax reliefs for the creative sector, which also includes animation and television production, will still come into effect from April 13, and will offer qualifying companies the chance to, "choose between an additional deduction at a rate of 100 per cent of enhanceable expenditure or a payable tax credit at a rate of 25 per cent of qualifying losses surrendered."

"Having run an independent games development and publishing company for many years, seeing this happen is great and long overdue news"

Andy Payne, chairman, UKIE

The statement also promised further investment in the existing Skills Investment Fund administered by Creative Skillset over the next two years, which will add video games to its remit. The government will match industry contributions of up to £6 million over the next two years.

The statement also announced a reduction in the main corporation tax to 21 per cent next year, better broadband for UK cities and £600 million in science research spending.

“Tax breaks for games production will ensure that the UK remains a world leader in the high technology video games development industry. A single 25 per cent level of relief will be simple to administer and economically impactful. Yet we will have to monitor the actions of our competitors: the province of Quebec in Canada already boasts a 37.5 per cent level of tax relief," said TIGA's Dr Richard Wilson, who also hoped the measure would help make high skill, export focused industries a bigger player in the UK economy.

“The provision of match funding for training and development in the creative industries could enhance productivity. It could also help to promote more sustainable companies, particularly if managers from small and medium-sized enterprises can draw on the funds to develop the vital business and strategic skills necessary for achieving sustained growth.”

UKIE also showed enthusiasm for the new tax reliefs, calling the move a "timely and favourable step to foster continued industry growth." UKIE highlighted several points as particularly beneficial to the future of the UK games industry, specifically the deicision to raise UKTI funding by 25 per cent and the 21 per cent reduction in Corporation tax by 2014.

However, with the allocation of the £6 million creative skills fund yet to be decided, UKIE has issued a "strong call" for the games industry's share to be in line with that for TV and film.

"It's great that government seem be listening to the industry. Games are a tough global business and having tax breaks will make it easier for our business to compete"

David Bailey, CEO, Mediatonic

“This first detail of the tax relief seems a positive step for our members and the wider industry," said UKIE CEO Dr. Jo Twist. "Whilst we called for a 30 per cent rate of relief for the scheme, UKIE was nonetheless pleased to see the rate set at 25 per cent, giving the games sector parity with other UK creative industries.

“As soon as the full draft legislation is published we'll be poring over the finer details to ensure that the fine tuning and implementation of the proposal is fully in line with the needs of our industry.”

Ian Livingstone, vice chairman of UKIE and life president of Eidos, claimed that this new assistance for the games industry, along with a renewed focus on computer science in the national curriculum, will help the UK to reclaim its standing in the global industry.

"Today's announcement of additional skills funding is more positive news, and a welcome sign of the games industry being seen as having the potential to be a leading growth industry to help drive the digital economy of the UK in the 21st century," he said.

Osborne confirmed the tax relief for the industry back in March, with the promise to "support our brilliant video games and animations industries."

The official budget report then stated the tax breaks would be introduced next April, and would see relief of £15 million in 2013-14, and £35 million in 2014-15.

GamesIndustry International will update this story with reactions UK developers as they happen.

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Rachel Weber

Senior Editor

Rachel Weber has been with GamesIndustry since 2011 and specialises in news-writing and investigative journalism. She has more than five years of consumer experience, having previously worked for Future Publishing in the UK.