New talk of Govt plan for games tax breaks

New talk of Govt plan for games tax breaks

By Rob Crossley

February 20th 2011 at 4:01PM

National paper claims chancellor is preparing 'eye-catching' measure; Industry rebuilding relationship with Treasury

The UK games industry is braced for another tense Budget report, as new indications suggest George Osborne could re-introduce games tax breaks into the finance bill.

Last year the chancellor abandoned plans for the tax relief just weeks into his tenure – despite Conservative promises to the contrary – in a move that quickly established him as a political piñata for the British games sector.

Yet in recent weeks, and with the March 23 Budget looming, the government has noticeably cultivated more positive connections with the digital entertainment industries.

Recently Osborne held private meetings with senior figures across various media and entertainment industries – of which one connected individual told Develop was “not customary”.

Now a fresh report, published today in the Sunday Times, claims that Osborne is “considering the introduction of tax breaks for the computer games industry as an eye-catching measure to put in his budget for growth”.

The article estimates that £30 million will be used to finance the tax break initiative.

When approached by Develop today, a Treasury spokesperson declined to comment on pre-budget rumour.

Michael Rawlinson, the director general of games trade association UKIE, told Develop that recent developments were “a sign that the government is taking the games industry seriously”.

“The government is seriously looking for initiatives that support Britain’s creative industries, and the games industry is an important one for them,” he said.

He didn’t know specifically if games tax breaks would be introduced into the finance bill on March 23, but he thought it not unlikely that the government would want to introduce an “instrument of support” for the sector.

Fellow trade association Tiga believes that games tax breaks could create 1,300 new games industry-linked jobs by 2015 – providing any tax break initiative would follow its own guidelines.

Tiga’s plan for games tax breaks would cost over £100 million in public funding – more than three times the amount estimated in the Sunday Times report.

The association's CEO, Richard Wilson, said tax breaks would be “a measure that would not only help a vast majority of video game developers, but also the wider UK economy.”

He added that Tiga “will continue to campaign aggressively for games tax relief in the run up to the Budget”, and will also urge the Government to enhance the existing R&D tax breaks.