Game tax break no-show lets UKIE down

Game tax break no-show lets UKIE down

By Rob Crossley

March 24th 2011 at 10:38AM

Budget avoids specific game dev measures, though industry groups nod at R&D tax credit improvements

Industry association UKIE says it is disappointed with the Treasury’s decision to again avoid introducing game development tax breaks in the UK.

Yesterday’s Budget was dubbed as a plan to ‘fuel the economy’; a new approach after Chancellor George Osborne last year announced drastic measures to cut away the deficit.

On that ethos, many in the games industry were cautiously optimistic in the build up to yesterday’s Budget report. However, no specific measures for tax breaks were introduced on the day.

Michael Rawlinson, UKIE director general, said it is “disappointing not to have industry specific tax breaks introduced”.

It is widely believed across UK games associations that tax breaks are the most effective way to pull investment back from countries such as Canada – which is booming from offering the biggest game tax break rates in the world.

The Treasury has said in the past that Osborne takes a macroeconomic approach on supporting the creative industries, lending explanation to yesterday’s announcement of improved R&D tax credits.

The R&D tax credit rate will grow to 200 per cent from April, and then to 225 per cent in 2012. These measures have been widely applauded by UKIE and fellow games association Tiga, and will impact on numerous industries beyond games.

UKIE is “delighted to see increases to the R&D tax credit rate”, Rawlinson said.

“UKIE identified changes to the R&D system as a key area in its pre-budget submission to Treasury and shall be concentrating on making sure that the industry makes full use of these tax credits through practical support in the coming months,” he added.
A 2 per cent cut in corporation tax is also hoped will keep the UK competitive in terms of operational expenses. Activision Blizzard boss Bobby Kotick last year said Britain is “ridiculously expensive” for game development operations.