Government’s industry investment has fallen sharp since 2010 General Election
Improvements to R&D tax credits will mean the Coalition Government is investing £159 million less in the UK games industry, independent data suggests.
The coalition last year reneged on its pledge for game development tax breaks, though in yesterday’s Budget it was applauded for raising the R&D tax break rate to 200 per cent.
But data shows the government is investing £159 million less in the British games sector by holding off game development tax breaks.
Tiga CEO Richard Wilson told Develop that game development tax breaks would inject £194 million into the games industry over a period of five years.
Former Chancellor Alistair Darling approved the measure, before his successor George Osborne axed the deal.
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Wilson said that R&D credit improvements will, by comparison, provide £35 million.
The difference between the two policies represents £159 million less that the Coalition will provide to the UK industry.
“I’m really glad Tiga managed to deliver £7 million to the UK games industry per year,” Wilson said, “but this is one part of our ongoing campaign.”
He said games tax breaks are the “clear number-one priority” for Tiga.
“Tax breaks can help all studios in the UK, small and big”.
Develop understands that R&D tax credits will not allow British studios to save money on game production, but instead research-led initiatives such as building game engines. That claim is being verified.
Some game studios have also told Develop that applying for R&D tax credits can be prohibitively complicated and stagnated.
Exchequer Secretary David Gauke said on Tuesday: ”On video games tax relief, we looked at it and did not feel that it achieved good value for money for the taxpayer.”
Your understanding that research led initiatives are necessary to claim R&D tax credits is correct. The R&D tax credits incentive scheme is targeted at bringing about advances in scientific or technological knowledge. This is the starting point for verifying all claims.
So for tech companies, particularly gaming technologies, it is a case of squirreling out those aspects of the work that are at the cutting edge of gaming technology and knowledge - ask yourself "would a competent games developer know how to achieve this objective?". If not, there may be the bare bones of a claim.
My experience of making R&D claims is that HMRC are normally pragmatic and relatively quick in turning them around. It is well worth investigating for all tech development companies.
The R&D incentive scheme is something that should be examined by every game company. If you are in this design and developing games, I would advise you to seek out a company who has both experience and technical specialists rather than accountants. You will need to ensure your claim demonstrates technical challenge as well as an advance of some description. Your technical specialist will advice on this aspect as this has to be against peer knowledge within the industry.
At the moment the scheme is expecially attractive for SME client and provides a significant overall benefit (potentially for loss making companies as well). At the very least have a conversation with your financial director and ask them to look into this, you may be pleasantly surprised at the outcome.
I'm not sure if I like how they have done this.
It forces studios to try and think how they can further technology (which is good) but in a lot of cases it could result in a sacrifice of game play and storyline.
I think the best examples of this working is if a company is developing there own game engine. Hopefully it will encourage studios to spend more time developing their games, rather than churning out repackaged sequels
