TIGA, the network for games developers and digital publishers and the trade association representing the UK video games industry, commended the Government’s decision to reduce corporation tax to 18 per cent by 2020. The new corporation tax rate was announced by the Rt Hon George Osborne MP, Chancellor of the Exchequer, in today’s Budget in Parliament this afternoon.
Dr Richard Wilson, CEO, TIGA, said: “TIGA commends the announcement by the Chancellor in today’s Budget to reduce the rate of corporation tax to 18 per cent by 2020. This will enable more businesses to invest more of their retained profits in skills, equipment and product development. TIGA also welcomes the Chancellor’s reduction in national insurance costs for small businesses. “
“We need to continue to advance the video games development and digital publishing sector in the UK. TIGA will continue to advocate measures including a Creative Content Fund to improve studios’ access to finance, the introduction of Regional and National Games Development Incubators to help start-ups and a pilot Training Tax Relief for small and medium-sized enterprises.
“In the meantime, TIGA looks forward to the introduction of the new £4 million Prototype Fund which was announced in the March 2015 Budget, together with the maintenance of the Skills Investment Fund.”
In addition to the reduction in corporation tax, other important measures announced in the Budget include:
- reduction in national insurance costs for small businesses;
- removing the artificial cap on student numbers;
- an increase in the investment allowance to £200,000 per annum;
- increases in personal allowances;
- devolution of powers within England; and
- the introduction of a new national living wage set at £9 per hour by 2020.
TIGA advanced five key proposals to policy makers, political parties and the Government in the run-up to the July 2015 Budget:
- A Creative Content Fund (CCF) should be established in order to improve studios’ access to finance, stimulate new content development and IP generation. The CCF could make loans available to games businesses on a pound for pound, matched funding basis. The CCF could be financed via the National Lottery or via Innovate UK (formerly known as the Technology Strategy Board). The CCF could build on the Prototype Fund announced in the March 2015 Budget.
- The amount of money that a company can raise via SEIS investment should be increased from £150,000 to £200,000 per annum to reflect the rise in development budgets required to make internationally competitive games.
- Regional/National Games Development Incubators should be established at a university or at a consortium of universities in each of the English regions and in each of the nations within the UK to boost start-ups, universities and regional growth.
- A pilot Training Tax Relief should be introduced for small and medium-sized enterprises (SMEs). TTR would operate in a similar way to the existing R&D tax credits and would enable SMEs to offset expenditure on training, Continuous Professional Development (CPD) for staff and education outreach activities against corporation tax. An SME Training Tax Relief could build on The Skills Investment Fund, which was extended in the March 2015 Budget for two years.
- Video Games Tax Relief should be retained. The Government should carry out a cost benefit analysis of the merits of enhancing the Relief in order to stimulate further investment.
TIGA envisages that the SME Training Tax Relief would be accessible to small businesses in many different sectors of the UK economy. Likewise, the SEIS scheme is cross-sectoral in nature.