Chancellor George
Osborne promised a games industry tax break during his Budget 2012 speech. But
where do we go from here? How will it work? Who will benefit?
TIGA,
the trade association representing the UK games industry, is today urging UK
games developers and digital publishers to step forward, contact TIGA, and have
their voices heard in forthcoming games tax relief consultations with the UK
Government.
The
Coalition Government used the recent Budget to announce its intention to
support the games industry but the details of any tax break are still open for
debate. TIGA will be working closely with the Government and Parliament in the
coming months to ensure that the tax break will be effectively designed and
easy to use for its members.
TIGA CEO Dr Richard Wilson said:
“TIGA’s
research shows that a tax break for games production will reduce the cost of
games development and has the potential to promote millions of pounds in
investment, create jobs and accelerate the growth of the UK video games
industry. We now have to
capitalise on the momentum and enthusiasm we have garnered at this moment in
time and seize this opportunity. We want as much feedback and input from our
members – and new members – as possible to guarantee that we help those working
at the coalface of the UK games industry.
“TIGA will be working closely with the Government, Parliament and
contacts within the EU to ensure that the new tax break is effectively designed
and easy to use. TIGA wants a tax credit that helps all studios – small, medium
and large – and we want a tax credit which supports games on all types of
platforms.”
In
February, TIGA submitted detailed evidence to HM Treasury and DCMS outlining
the positive impact that a tax relief would have on the UK games industry and
the wider economy. The report, A New
Video Games Tax Relief: An Incentive to Build a Sustainable Video Games
Development Sector, includes key provisions that should be incorporated
into a successful games tax relief.
How TIGA envisages the Games
Tax Relief being administered and implemented:
- The Games Tax Relief will apply to any
interactive product irrespective of the platform or manner of distribution.
This means that it could include products that have more direct educational or
commercial applications.
- Qualification for games tax relief depends
on the following three criteria being met:
i)
Eligible
companies can be registered in the UK; a UK subsidiary of companies not
registered in the UK; or non-UK companies with a UK branch.
ii)
The
product must pass a cultural test that highlights aspects such as European
content, originality and innovation to ensure the best standards of development
and gameplay.
iii)
The
game must not contain pornographic material or extreme violence. This is the
same approach taken by the UK Film Tax Relief and the French games industry tax
relief regarding graphic content.
- As with the UK Film Tax Relief, TIGA
proposes two tiers of tax relief on 80 per cent of UK core expenditure:
i)
Tier
1 encompasses games with budgets ranging from £50,000 to £3,000,000 and is
designed to provide greater assistance to smaller video games on online
platforms, PCs, handheld, small-scale console video games, mobile, social and
other emerging platforms. A 25 per cent relief will help smaller companies and
start-ups with weaker cash flow and limited access to finance. These companies
are more likely to be (but will not be exclusively) UK-owned companies that can
create and retain their own IP rights.
ii)
Tier
2 encompasses games with budgets of £3,000,000 and above, and is aimed at
larger online and offline PC titles and medium-large scale console video games
created by medium to large studios. This 20 per cent relief is designed to
assist both independent studios and publisher studios that work on licenses or
contracts for publishing partners across multiple video games platforms.
- The application for Games Tax Relief
should follow a similar process to that of the Film Tax Relief. Development
companies will make an application for an interim certificate to confirm that
the game passes the cultural test enabling it to submit a tax relief claim to
HMRC before the game is completed. Once the game has been completed, the
development company will apply for a final certificate and submit a final claim
to HMRC. There will be a right to appeal if a game does not pass the cultural
test on initial application.
- Applicants should be able to make a
draft application and receive a ‘letter of comfort’ confirming that a game will
pass the cultural test. This will help development companies secure a publisher
partner or other investment for a proposed development project that is not yet
at the interim certificate stage of development.
- A significant proportion of
development projects get cancelled during the development process and we
propose that the Games Tax Relief can be claimed for cancelled projects.
- It will be of vital importance that
the administering organisation put in charge of assessing whether or not games
pass the cultural test has a detailed knowledge of the nature of interactive
entertainment products and the processes involved in their creation and
production.
Jason Kingsley, TIGA Chairman and CEO
and Creative Director at Rebellion, said:
“TIGA has consistently campaigned for
a Games Tax Relief and it is excellent news for the industry that a tax relief
will now be implemented. The Games Tax Relief proposal that TIGA submitted in
2012 is wider in scope and eligibility than ever before, with games with
budgets as low as £50,000 being able to benefit from a tax relief. This
reflects the changing landscape of the UK games development industry following
the rise of online, mobile and social gaming in the last few years. A
consequence of this is that the Games Tax Relief will boost a large number of
smaller UK studios and start-ups, enabling them to both create and retain
original IP which is crucial to securing the long-term success of our national
games industry.”
To find out
more about TIGA’s Games Tax Relief proposal and to enquire about joining TIGA
please visit: www.tiga.org.
ENDS
Notes to
editors:
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 11 business awards
and has been nominated a finalist for 9 other awards. In 2010 TIGA won two business awards including
‘Trade Association of the Year’ from the Trade Association Forum.
In 2011, TIGA
won eight business awards including ‘Trade Association of the Year’ from the
Trade Association Forum, ‘Outstanding Organisation’ from the Chartered
Management Institute and two Global Business Excellence Awards, including
‘Outstanding Marketing Campaign’.
Richard Wilson won the ‘Leadership Award’ from the Trade Association
Forum and the ‘Outstanding Leader’ award from the Chartered Management
Institute. In 2011, Richard Wilson won the IoD’s East of England Director of the Year Award. TIGA is an Investors in People
organisation.
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. Or call Marc Ambasna-Jones on: +44 (0)7966 510702; or email: marc@marcompr.net