TIGA initially secured Games Tax Relief in the March 2010 Budget. This was dropped by the Coalition Government in the June 2010 Budget. TIGA ignored the siren calls to give up and instead continued to wage a vigorous campaign for the introduction of Games Tax Relief.
After another 18 months of relentless work, TIGA successfully persuaded the Coalition Government in the March 2012 Budget to back Games Tax Relief. However, Games Tax Relief was then blocked by the EU Commission as it announced a formal investigation into the proposal in April 2013.
TIGA then submitted compelling evidence to the EU Commission, co-ordinating its efforts with the UK Government and its partners in the European Games Developers’ Federation (EDGF) to successfully assuage the EU Commission’s concerns. Finally, TIGA’s campaign for Games Tax Relief reached a successful conclusion in March 2014 when the EU Commission finally consented to its introduction in the UK.
Tax relief for the video games sector is increasing employment, innovation and investment in the UK video games industry and enabling us to compete on a more level playing field with our overseas competitors. This is a significant victory for the UK games development and digital publishing sector and will provide a powerful boost to the industry.
TIGA published a report in February 2021 evidencing the benefits of an increase in Video Games Tax Relief (VGTR) from 25 per cent to 32 per cent. The report, Boosting the UK Video Games Industry: Increasing Video Games Tax Relief (TIGA, 2021) analyses survey data from industry, data from the government and economic modelling. The report demonstrates that a 32 per cent rate of VGTR would result in more investment, greater headcount growth and larger tax receipts for HM Treasury.
VGTR was crucial in enabling the UK video games industry to compete on a more level playing field against the UK’s international competitors, particularly Canada, which benefit from generous forms of tax relief. The Irish Government introduced a digital gaming tax credit for the Republic. The tax credit provides 32 per cent corporation tax relief on design, production and testing expenditure of €100,000-€25 million per project. In light of this, TIGA called for an increase in the rate of VGTR from 25 to 32 per cent.
TIGA published an updated report in February 2023 evidencing the benefits of an increase in Video Games Tax Relief (VGTR) from 25 per cent to 32 per cent. The report, Going for Growth: Growing the UK Video Games Industry Through VGTR (TIGA, 2023), demonstrated that increasing the rate of VGTR from its current rate of 25 per cent to 32 per cent of qualifying expenditure would create nearly 1,900 additional full-time development jobs over five years.
The Government announced in March 2023 that Video Games Tax Relief will be replaced with a Video Games Expenditure Credit. The new credit will have a rate of relief of 34% on 80% of qualifying expenditure. TIGA has campaigned for a higher rate of relief for many years and in advance of the 2023 Budget.
The Chancellor announced the following details concerning the Video Games Expenditure Credit:
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The Video Games Expenditure Credit will cover the current Video Games Tax Relief and will have a rate of 34%.
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Qualifying expenditure for the Video Games Expenditure Credit will be expenditure on goods and services that are ‘used or consumed in the UK’.
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From 1 April 2025, new games must claim the Video Games Expenditure Credit. Games in development on 1 April 2025 may continue to claim EEA expenditure under the current video games tax relief until April 2027.
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The eligibility requirement for the Video Games Expenditure will require a minimum of 10% of expenditure to be used or consumed in the UK.
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There will be no cap on subcontracting in the Video Games Expenditure Credit.
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The 80 per cent cap on qualifying expenditure will be maintained.