Video games tax relief passes final hurdle
27 Mar 2014 04:33 PM
European Commission gives the go ahead for a tax
break for UK video games sector
Generous tax reliefs for the UK video games sector have
been given full approval by the European Commission.
Chancellor George Osborne has welcomed the decision
following an investigation into the relief by the Commission in order for it to
receive state aid approval.
Announced at Budget 2012, the relief will provide
support for the growing video games sector in the UK.
There are currently around 500 games development studios
in the UK, employing around 9000 staff. In 2013 sales of video games in the UK
totalled £2.19 billion.
Commenting on the decision by the Commission, the
Chancellor said:
This is a key industry of the future and I want Britain
to be one of its biggest centres. 95% of UK video games companies in the UK are
SMEs.
This relief is one of the most generous in the world and
will help them to grow, creating new jobs for hardworking
people.
The
generous new corporate tax relief will come into effect from 1 April 2014, and
it is estimated that the relief will provide around £35 million of
support a year to the sector.
The
relief enables companies to be eligible for a payable tax credit worth 25% of
qualifying production costs, and builds on the successful model of the film tax
relief which can be claimed on production expenditure in the UK, and the new
High-End TV and animation tax reliefs.
In
2011 to 2012 the film tax relief provided more than £200 million of
support to around 200 films. Since its introduction in 2007, direct employment
within the sector has almost doubled and 1,050 film productions have made 1,900
claims, for a total £1.1 billion.
State aid approval has already been received for
high-end television and animation, which were also announced at Budget 2012.
These reliefs come into effect from 1 April 2013.
Creative industries Minister Ed Vaizey
said:
This is tremendous news for the supremely talented and
creative UK games sector.
The
government recognises the important contribution the industry makes to the
economy and is committed to supporting the industry’s continued growth
through a range of measures like these new tax reliefs.
Dr
Jo Twist, CEO of UK games and interactive entertainment trade body, Ukie,
added:
This is amazing news for the UK games and interactive
entertainment sector and will help developers of all shapes and sizes to grow
and make more games right here in the UK. This is the culmination of an immense
amount of hard work and we’re delighted to have played our part in a
collective effort to get the tax reliefs in place.
We
now look forward to helping games businesses to access the relief and
we’ll be working even harder to make the UK the best place in the world
to make games. We’d like to thank UK government for their support, in
particular HM Treasury and DCMS.
Dr
Richard Wilson, CEO of TIGA, the association for games developers and digital
publishers, said:
This is a coup for the government, a superb decision by
the EU Commission, and magnificent news for the UK video games industry. TIGA
has been campaigning for video games tax relief for seven years because it will
create jobs, boost investment and enable the production of more British video
games.
Tax
breaks for games production will help the UK fight its way back to the
forefront of video game development. The video games tax relief will benefit a
highly skilled, high-tech, R&D intensive and global export focused
industry.
TIGA now looks forward to working with the government
and other interested parties on the implementation of the video games tax
relief to ensure the full benefit of this landmark moment in the history of our
industry.