Video games tax credit

TIGA, the trade association representing the UK’s games industry, said today that new research commissioned by the National Endowment for Science, Technology and the Arts (NESTA), gave a powerful endorsement to TIGA’s long standing campaign for a tax break for games production.

NESTA commissioned Games Investor Consulting (GIC) to survey the UK games development, publishing and financing industry, following the Department of Culture, Media and Sport’s request to TIGA and other interested parties to provide evidence to sustain the case for a cultural tax credit.

NESTA’s research found that:

· Almost three quarters of executives thought that original intellectual property (IP) had declined in the last five years;

· Games industry respondents’ top concerns were the effect of generous tax breaks for games production that exist in other jurisdictions and a creeping brain drain to these territories;

· 97% of respondents backed a tax credit for games production;

· All UK development studios projected definite or potential growth in employment with the tax credit;

· 70% of publisher and external finance company respondents said that they would be more likely to invest in a UK development studio if a tax break were established;

· Two-thirds of studios stated that a tax break would promote original IP development and 75% of independent developers stated that it would help enable them to hold on to IP they create;

· All independent developers surveyed thought that a tax break would enable them to adopt more innovative and sustainable online and mobile business models, going direct to the consumer

· Third party development funding by publishers would also be boosted, with all managers in charge of external contracting saying that a tax credit could well make the difference between investing in or passing on UK games development opportunities

Richard Wilson, CEO of TIGA, said:

“NESTA’s research confirms that while the UK video game sector remains a world leader it has been under enormous pressure for the last five years. This is because our key overseas competitors have benefited from generous tax breaks for games production. The unfavourable tax environment has also led to a decline in the development of original intellectual property on the part of the UK games industry.”

“NESTA’s research also shows that a tax break for games production could lead to employment growth, the development of new IP, attract external funding into video games and encourage overseas publishers to invest in the sector. Significantly, independent game developers are unanimous in believing that a tax break for games production would enable them to adopt more sustainable online business models, selling games directly to the consumer.”

“This report backs TIGA’s long standing campaign for a tax break for games production. We hope that the UK Government will consider this report in conjunction with our own detailed evidence which will be submitted to the DCMS this week.”

TIGA is submitting detailed evidence on the case for a cultural tax break to the Department of Culture, Media and Sport later this week. This evidence will provide Government with a clear framework and rationale with which to introduce a cultural tax break in the UK. TIGA will also be making this evidence available for public and media consumption.

To receive a copy of TIGA’s report or for more information please contact Eva Field, on eva@tiga.org.