Small Budget Games to Benefit From Games Tax Relief

By December 11, 2012 Press Releases

TIGA, the trade associationrepresenting the games industry, welcomed the news that there would be no
minimum spend threshold in order to benefit from Games Tax Relief. This will
mean that small budget games, provided that they pass the cultural test, will
be supported by Games Tax Relief.  The
‘games as a service’ business model will also be able to benefit from the new
Relief. TIGA made the comments following the publication of the draft
legislation implementing Games Tax Relief. 

The Government has decided
that:

  • Games Tax Relief will be modelled on Film Tax
    Relief
  • There will be a single 25% tax relief on UK
    qualifying expenditure
  • Games with some product placement or in-game
    advertising will be eligible for relief (but games whose primary purpose is
    gambling or advertising will be excluded)
  • Companies must self-certify during the
    application process that a game does not contain pornographic or other extreme
    material
  • The Government will allow all direct
    production expenditure to be eligible for relief in line with the existing
    treatment available under the film tax relief. 
  • Early stage expenditure incurred should be
    eligible for relief once a commercial decision to develop a complete game has
    been made. HMRC will provide guidance on the application of this principle in
    due course. 
  • The Government intends to allow all direct
    development expenditure (including relevant quality assurance) incurred after
    the release of a qualifying game to be eligible for relief, but to exclude all
    service maintenance costs. 
  • The Government agrees not to introduce a
    minimum spend threshold in order to keep the relief as simple as possible for users.  

Dr Richard Wilson, TIGA CEO, said: 
“This
is excellent news for the video games industry. The Government has listened to
our proposals and adopted the vast majority of our suggestions for the design
of Games Tax Relief. TIGA is particularly pleased that there is no minimum
spend threshold: this will enable start-up studios and small development
businesses with smaller budget games to benefit from Games Tax Relief.
Additionally, it is excellent that the Government has agreed to allow
post-release development expenditure including QA costs to be eligible for
Games Tax Relief. One of TIGA’s key priorities has been to ensure that the new Games
Tax Relief supports the ‘games as a service’ business model. The Government
agrees. This is a good day for the UK games industry.”There was more positive news
with the publication of the latest iteration of the cultural test which games
will have to pass in order to be classified as culturally British games and so
benefit from Games Tax Relief. The draft cultural test requires games to secure
16 points in order to qualify as culturally British games. 

Points will be
awarded if: 

  • the game is set in the UK or another EEA
    state or in an undetermined location
  • the lead characters are from the UK, the EEA
    or from an undetermined location
  • the video game depicts a British story or a
    story which relates to an EEA state
  • the English language is used in the game
  • the video game promotes, develops or enhances
    British culture
  • at least 50% of the work on conceptual
    development, layout and storyboarding, programming and visual design was
    carried out in the UK
  • at least 50% of the work on performing and
    recording the music score created for the game, voice recording, audio
    production or picture production is carried out in the UK
  • the project leader, scriptwriter, composer,
    artist, programmer, designer and one of the heads of department are qualifying
    persons, and if at least 50% of the development team are qualifying persons. 

About TIGA: 

TIGA is the trade association representing the UK’s games
industry. The majority of our members are either independent games developers
or in-house publisher owned developers. We also have games publishers,
outsourcing companies, technology businesses and universities amongst our
membership. Since 2010, TIGA has won 14 business awards and has been nominated
a finalist for 16 other awards.  TIGA's vision is to make the UK the best place in the
world to do games business.  

We focus on
three sets of activities: political representation, generating media coverage
and developing services that enhance the competitiveness of our members.  This means that TIGA members are effectively
represented in the corridors of power, their voice is heard in the media and
they receive benefits that make a material difference to their businesses,
including a reduction in costs and improved commercial opportunities.

For
further information, please contact Dr Richard Wilson, TIGA CEO on: 07875 939
643, or email: richard.wilson@tiga.org.

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