Creative industry hoping for more tax breaks in Budget 2014
Freelancers in the media, marketing, PR, design, digital, film and gaming sectors will be watching George Osborne on Wednesday, to see if his recent warm words about the creative industry translate into firm actions.
Speaking last month on a tour of Ealing Studios, the chancellor said he wanted to “build on” the valuable cultural and economic contributions that the creative industry had made through two packages of tax breaks.
It is these packages, one for British films and the other for high-end TV and animation productions, that Mr Osborne has been urged to extend to boost the creative industry which (since the IT sector was included) is the UK's fastest-growing, for being valued at £71billion a year.
“The creation of more tax reliefs is…vital to secure our competitive advantage,” the CBI, the UK’s employers’ organisation, urged in a blog posted in this year’s first quarter.
“The UK is home to the best creative industries in the world and London remains the major European destination for foreign and direct investment…however, now is not the time for complacency or back-slapping”.
More support for the UK’s creative workforce is critical because the introduction of a 37.5% tax break in Quebec for the gaming industry has boosted its jobs by more than a third, “largely at the UK’s expense,” the CBI said.
A system of tax relief for UK games developers was floated by Mr Osborne to much applause in 2012, but its roll-out has since been delayed as the European Commission is yet to accept the initiative as suitable.
But a signal on whether the UK is permitted to offer tax breaks for independent games development may be included at Budget 2014, as the UK’s creative industries minister has reportedly described the EC’s decision as “imminent.”
In fact, Ed Vaizey, minister for Culture, Communications and the Creative Industries last month said that, having personally worked very hard to achieve a resolution, an announcement by Brussels was expected “very soon.”
“I do think the tax credit is going to be a vital part of the success of the industry,” Mr Vaizey was also quoted as saying by Develop.
“Because we are experiencing another industrial revolution in my opinion, we’re experiencing a creative industrial resolution and games are a part of it.”
An all-clear from the European Commission will be welcomed by TIGA, the trade association for the UK video game industry, which is calling for more support for the sector’s start-ups and a greater focus from developers on business skills.
Speaking this month, the group’s chief executive Dr. Richard Wilson explained: “When we speak to our members we hear that, first and foremost, the biggest challenge indie developers face is business survival and the bottom line – funding and cash flow”.
In attendance at TIGA’s latest conference was Richard Heap, a partner at accountancy firm Kingston Smith, who echoed the importance of sound business skills if games developers, or any other type of creative business, want to succeed.
“With any creative industry, and indeed with any creative person, there will always be a preference for focusing on the product, the design, or the idea,” he said.
“But right now, we are in an environment where a lot of start-ups [are] competing for funds and they won’t get a second chance if things go awry.
“So skills such as how to plan a business model, how to map out and forecast your revenue and cost streams, your cashflows, evaluating which markets and platforms to prioritise, these aren’t nice-to-haves anymore.”
Although it is not the first time that creatives have been urged to sharpen up their business skills, the Start-Up Britain campaign has been credited with helping creative types improve their commercial acumen.
As a supporter of the campaign, Mr Osborne could use his Budget to alert would-be business owners that the Centre for Entrepreneurs is taking over Start-Up Britain’s work, or he may trumpet the ongoing work of Start-Up Loans, the government-backed scheme.
Yet Budget 2014 could see something more radical to help aspiring business owners. At the recent conference of the Federation of Small Businesses, the Treasury said it was “hungry for ideas” on what the chancellor could do to boost the smallest traders, such as freelancers.
Editor's Note: UPDATE - (20.03.14) Osborne boosts creative industry in Budget 2014