Design for video game tax breaks wanted

The government has kept its promise to try to reinforce the UK as Europe’s technology centre by unveiling new tax breaks for video game production, in a move calculated to boost the economy and safeguard thousands of jobs.

Launching a consultation paper, the Treasury said it wanted production companies, video games makers and developers to feedback on the proposed options for the design of the tax breaks.

Intended to build on the success of the existing Film Tax Relief, which has led to £1bn in extra investment in British cinema, the breaks will be open for individuals and companies to comment on until September, with a view to draft legislation being published in the autumn.

Upon completion, they should allow the UK games industry to “compete on a more level international playing field”, while securing 4,660 jobs and £188m in investment over five years, said sector trade body TIGA, welcoming the consultation.

“Much of the UK and Scottish video games development sector is involved in tablet, mobile and online games development", said Dr Richard Wilson, group chief executive, “it is crucial that the new relief supports these developers and digital publishers, as well as the more the traditional console developers and publishers.”

It is also important that a proposed ‘cultural test’ – which games will need to pass to qualify for the relief – is backed and approved by both the government and the EU, added TIGA, and that it helps the UK’s developers and digital publishers.

For its part, the government said it would launch a separate consultation on the cultural test later in the year, once responses to the design of the tax reliefs, “among the most generous in the world,” have been taken into account.

“I want the UK to remain a world leader in the creative industries”, added George Osborne, the chancellor, speaking at the consultation’s launch.

“High-end TV, animation and video games production are exactly the kind of innovative, high-tech industries at which this country excels, and the government is determined to support them as part of our efforts to grow this economy.”

TIGA says it is vital that the tax breaks cater for games as a service business model (such as most Facebook and iPhone games), to allow studios to make annual claims on development of their continuous, evolving products, in addition to the initial categories of costs that would be allowable for the relief.

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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