Timeline: The painful wait for UK games tax breaks

Timeline: The painful wait for UK games tax breaks

By Rob Crossley

March 21st 2012 at 2:30PM

Develop highlights the twists and turns in this six-year saga

The coalition government’s dramatic volte-face in support for game tax breaks, announced today, is one key moment in the industry’s tireless campaign for state support.

Here are the key developments from this dramatic six-year saga.

[Links to original Develop articles can be found in item date, where available]

March 2006: CANADA

The Canadian province of Ontario catches industry attention by aggressively increasing its interactive digital media tax credit from 20 to 30 per cent.

November 2007: EU

French President Nicolas Sarkozy expresses support for the video game industry and calls for the EU Commission to approve France’s tax credit policy.

December 2007: EU

The European Commission approves France’s game tax credit under an exemption on EC Treaty rules on state aid. Tax breaks are, by default, banned in Europe if they give one member state an advantage over another. In this case the exemption was that games qualifying for tax breaks can “promote culture”. This shaped the “cultural test” that tax breaks would be associated with across Europe for several years. Nevertheless, the EU scheme was scheduled to expire on December 31st 2011.

March 2008: TIGA / UK

Trade association Tiga appoints new CEO, Richard Wilson, who immediately calls on UK government to introduce a tax break measure for the nation’s games sector.

“Canada’s subsidies for games developers mean that the playing field is increasingly tipped against UK based games developers”, Wilson said.

His comments were the foretoken to a tumultuous four years for the UK games development sector, with key British ‘triple-A’ studios closing down and thousand-man mega-studios established across Canada.

March 2008: CANADA / UK

As Eidos decides to move its production facilities to Montreal, industry veteran Ian Livingstone, Kuju's Ian Baverstock and Rebellion's Jason Kingsley call on Britain to introduce its own tax breaks.

April 2008: UK / CANADA

The UK Culture department investigates the legality of Canada’s tax incentives for games studios with the World Trade Order.

July 2008: UK

Developers and key industry executives continue to rally for game tax breaks in a largely united campaign called GamesUp? The issue for tax relief is covered on national television and radio stations. More than fifteen publishers and developers are on board by this stage.

July 2008: UK / GOVT

Labour culture minister Margaret Hodge pours cold water on policies for game tax breaks.

“I know this is hugely important to many of you. And you rightly make the comparison between the relief we give to film,” she said. “I also know and understand what is happening worldwide. We’re nervous about these forms of tax relief. Because it costs us money. And you don’t want to get into an international Dutch auction.”

Late 2008: GLOBAL FINANCIAL CRISIS

The underpinning financial institutions of the western world are thrown into disarray after a subprime mortgage disaster in America sparks a global credit crisis. Domestic and overseas governments policies realign to a new world of economic uncertainty and austerity.

June 2009: UK / GOVT

New Culture Secretary Ben Bradshaw distances himself from his predecessor’s comments, and claims that Labour is considering support for the UK games industry. Labour MP Tom Watson begins to lobby inside parliament for games tax breaks.

June 2009: UK / ELECTION

David Cameron begins electioneering despite no General Election date. Industry bodies take advantage of the situation and urge the Conservative to support tax breaks.

June 2009: UK / TIGA / UKIE / BUDGET

The Culture department asks Tiga and ELSPA to submit evidence for game tax breaks, claiming that the proposals will be passed onto the Treasury. Years later it emerged that ELSPA (now UKIE) had raised concerns over the initiative – a position it has since distanced itself from.

July 2009: CANADA

Ubisoft expands its presence in Canada with a new Toronto studio. Tax breaks in some Canadian regions by now offer 40 per cent discount on production costs.

October 2009: UK / ELECTION

Shadow culture minister Ed Vaizey is publicly pressed on whether the next government will introduce games tax breaks – he declines to endorse the measure.

December 2009: UK / BUDGET

The Labour Chancellor Alistair Darling snubs game tax breaks in his pre-budget report, as Treasury claims the calls for games tax breaks are “unconvincing”. Studios and industry figureheads slam the decision.

January 2010: UK / ELECTION

As a general election looms, Financial Secretary to the Treasury, Stephen Timms, declares that the Labour Government will “continue to look at the industry's case for a change to tax treatment.”

January 2010: UK

Game tax breaks are backed in a House of Lords debate.

March 2010: CANADA

Warner Bros becomes the latest publisher to invest in a development studio in Canada, backed by local government and set to benefit from tax breaks.

March 2010: UK / GOVT / ELECTION

Shock and jubilation as Labour introduces a UK tax break policy in its final budget before the election. Scores of industry professionals praise the move.

March 2010: ELECTION

Conservative shadow culture minister Ed Vaizey claims the part will introduce tax breaks in its first budget if elected.

April 2010: ELECTION

Prime Minister Gordon Brown calls for a general election. By this stage both leading parties claim they are behind game tax breaks. Labour’s policy, announced just a few weeks prior, is on hold as the government dissolves.

April 2010: CANADA / UK

Canada becomes the world’s third-largest employer of game industry professionals, overtaking the UK, according to newly published data.

April 2010: ELECTION

The Conservative Party’s election manifesto features no claim it will support game tax breaks.

April 2010: ELECTION

Ed Vaizey claims the Tories will publish a tax break plan, or ‘mini-manifesto’ shortly.

April 2010: ELECTION

The Conservative Party delays publication of its ‘mini-manifesto’, for reasons unknown.

April 2010: ELECTION

Treasury sources and MPs reveal to Develop that the Conservatives have abandoned plans for games tax relief.

April 2010: ELECTION

The Conservative Party contests Develop’s article and asks for it to be removed, claiming that it will still implement tax breaks if elected in May.

April 2010: ELECTION

The Liberal Democrats announce they will back game tax breaks if elected.

May 2010: ELECTION

An unlikely coalition between the Liberal Democrats and the Conservatives is formed following a Hung Parliament in the 2010 general election.

May 2010: UK / GOVT

The Coalition claims it has put Labour’s tax break plans "on hold for now".

June 2010: UK / GOVT

The Treasury scraps plans for what it refers to as a “poorly targeted” tax break policy as the country steps into a new age of austerity measures. Sony and Activision are among the scores of industry figures who condemn the u-turn.

July 2010: UK / GOVT

Prime Minister David Cameron faces repeated questions as to why the coalition backed away from game tax relief, often in the House of Commons during Prime Minister’s Questions. Some industry figures, such as those belonging to trade group Tiga, continue to protest, but the argument becomes quiet as the government turns cold on any such policy.

October 2010: CANADA / UK

THQ becomes the latest publisher to invest in a development studio in Canada, backed by local government and set to benefit from tax breaks. Company executive Danny Bilson says the company chose Canada due to its tax relief subsidies.

November 2010: UK

Tiga reveals that Britain’s game development workforce fell by nine per cent in two years, according to independent data.

December 2010: UK / GOVT

Culture Minister Ed Vaizey claims that game tax breaks are off the table until the 2015 general election.

January 2011: UK

Tiga warns that Britain could lose another 2,000 developers by 2015.

February 2011: GOVT / UK

A new report reveals that Ed Vaizey, the culture minister who pledged to introduce games tax breaks in the Conservatives’ first budget, did not fully support the initiative himself.

October 2011: EU

David Cage, the co-CEO of Paris studio Quantic Dream, claims his studio would have to consider relocating to Canada if the nation’s tax breaks policies were abolished.

February 2012: EU

France’s EU tax break policies are blocked as the European Commission’s “cultural exemption” expires as scheduled. (see: December 2007)

March 2012: EU

The European Commission’s competition directorate-general has indicated that the existing block to EU tax breaks may be lifted. Whether studios can apply for tax breaks through the cultural loophole is still unclear, however.

March 2012: UK / GOVT / EU

Coalition Chancellor George Osborne shocks the global games industry by announcing support for games tax breaks in the UK, two years after claiming the measure would be poorly targeted.