UK video games studios win tax relief

The ‘level playing field’ with the rest of the world that Britain’s video games developers have doggedly pursued for seven years has been approved by the European Commission, in the shape of generous tax breaks.

Welcoming what it estimates to be a £188m shot in the arm, the sector’s trade body said the scheme could finally be “set in motion,” so games with a strong British flavour which use UK-based production teams can benefit.

The trade body, TIGA, adds that the approval of the scheme by Brussels represents the first time that video games have been recognised as cultural products similar to other audio-visual creations, such as films.

It also means that more than 4,500 jobs in the gaming industry – including in the creative industry as a whole – can now be generated or protected, on top of a boost to UK tax receipts valued at £172million.

“All [this] at a cost of just £96m over five years,” reflected TIGA. “[Games Tax Relief should also] encourage approximately £188m additional investment expenditure by UK studios.”

Indeed, Nellyvision, an independent studio formed after the Second Life makers closed down in the UK in 2010, characterised the approval of the tax incentives as a “break-through moment.”

Trevor Williams of Playground Games, developers of racing title Forza Horizon, agreed. “Our vision has always been to build a development studio which could compete with the very best in the world, creating big budget console games for a global audience,” he said.

“Many other UK studios… want to be the best in the world,[and] now have a level playing field on which to compete. It's a great day for British business, and a historic moment for our industry.”

According to initial details of the scheme, tax relief will be on offer to companies producing video games that make use of British characters, language or dialogue and locations.

But only games that are deemed to be of “cultural value” will be eligible for the relief, which is estimated to equate to around 25 per cent of UK-produced games.

“Without this [new] support the number of new culturally British games is likely to decline considerably,” reflected the European Commission.

“Our initial doubts have been dispelled. The proposed aid for video games is indeed focusing on a small number of distinctive, culturally British games which have increasing difficulties to find private financing.”


30th March 2014

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