New tax relief for games industry

At Budget 2012, the Chancellor announced new tax relief for the video games industry.

The tax relief will be worth up to 25% of qualifying development expenditure. The video games tax relief will back the UK games development industry by ensuring that all qualifying UK expenditure is eligible for support.

The tax relief, which will be effective from 1 April 2013, is a move to boost an already-thriving industry further and to help level the playing field in response to other countries offering tax reliefs. The UK already has a competitive advantage through its homegrown talent but these reliefs will help ensure that Britain remains at the forefront of games design.

This tax relief will lessen the financial risk of producing new games and enable games studios to invest in more staff. Reduced financial risk will also make it easier for games developers who are fresh out of university to start their own companies.

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Recognising the games industry's contribution

Similar tax breaks have already been introduced for the film industry and have attracted big filmmakers to produce in the UK when they could have gone elsewhere. These tax breaks recognise that games are as important as film and television in contributing to the country's cultural and economic output and are integral to the UK's future business growth.

As in the film industry, game producers will need to undergo means testing and meet 'culture test' requirements, to ensure the new measures will encourage companies to employ talented British developers in order to qualify for tax relief (more info here). Games designed as advertising vehicles or that promote gambling will be excluded from the scheme.

The games industry tax reliefs follow the Secretary of State for Education's announcement that he is committed to re-addressing outdated ICT training and the Government's announcement, also in the Autumn Statement, that it will provide £6m to give entry and professional-level training for 3,300 people working in the games, TV and animation industry.