TIGA hails positive budget for UK developers

Independent developer representative body TIGA has welcomed changes introduced in last week's UK budget, which it says will benefit studios by making more development costs eligible for the R&D tax credits system.

Advisors working with TIGA suggest that under the new R&D tax credits scheme - which the organisation worked with the treasury and other government agencies on during the consultation phase - may make up to 40 per cent of the development budget qualify for tax relief.

Under the scheme, companies can claim 150 per cent of their research and development expenditure - which includes much of the game development process - against corporation tax, or 24 per cent of employment costs if the company is not profitable.

TIGA will be bringing a panel of experts to meetings in London, Leeds and Dundee in June to discuss with developers the implications of these changes, which include, for example, the classification of middleware such as Renderware as a "consumable store".

Unfortunately, it's not all good news from the budget, as plans which had been put forward to attract new project financing for the games industry by leveraging the R&D tax allowance system have been rendered impossible by the government's crackdown on tax loopholes in similar schemes in the film industry.

However, TIGA believes that this may not entirely be a bad thing, as the closure of these loopholes will free up more investment capital for the games industry, and other new incentives from the Chancellor will make investing in high-risk areas such as games more attractive.

"Two years work on R&D as it applies to games has paid dividends," explained TIGA chief executive Fred Hasson. "Developers can now claim more credits than before - we estimate that the qualifying costs are now double what they were - and two more government departments (including the Chancellor) now have up to date knowledge and information on the games industry."

"We have an ongoing relationship with these departments which [we] will continue to use," he continued, "and we believe that we can improve the position further. Our job now is to make sure that the industry uses these tax credits, because there is evidence that some companies are not taking advantage of this — this will be the purpose of the Tax Credits Roadshow in June."