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TIGA: Industry to decline 5% without UK tax breaks

But new tax reliefs could see 4% annual increase for British developers

The UK development industry could face a 5 per cent year-on-year decline unless the government institutes new tax breaks, claims trade organisation TIGA.

However, if games specific tax relief were introduced TIGA predicts annual growth of 4 per cent. The organisation, which has long campaigned for tax breaks in the UK similar to other countries such as Canada, published its findings in a new report at the start of the London Games Festival Week.

"The UK games industry is still successful and world leading. However, because most of our key competitors benefit from a tax break for games production, our industry is at a competitive disadvantage, said Gareth Edmondson, TIGA vice chairman and MD of Ubisoft Reflections.

"Unless the UK government introduces TIGA's proposed games tax relief, our research suggests that employment in the development sector will fall by 5 per cent in each of the next five years, from 9025 in 2009 to 7351 in 2014. There would also be a fall of GBP 1.9 million (USD 3.1 million) in development expenditure over the same period."

"With games tax relief enacted, the industry would stop shrinking in 2010, grow by 2 per cent in 2011 and by 4 per cent in each of the next three years. 3550 graduate level jobs and GBP 457 million (USD 750 million) of investments in the development sector would be created or protected with the advent of the tax break", added Edmondson. "Over five years the tax measure would cost GBP 192 million (USD 315 million) but would deliver GBP 415 million (USD 682 million) in tax receipts."

"The UK Government has a clear choice: invest in an inherently successful industry to perpetuate our leading position in the world, or preside over the decline of a key knowledge industry," said Edmondson, who is due to speak on behalf of TIGA at GameHorizon's "Best of British" event on October 28 at the London Games Festival.

Although most UK games companies agree with TIGA's general position, Introversion Software MD Mark Morris recently claimed, in an exclusive interview with GamesIndustry.biz, that the existing financial benefits in the UK are "quite useful" and that the UK government "does more than it is credited" - although he agreed that more should be done to bring it equality with the film and television industries.

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David Jenkins