UK games tax relief delayed

UK games tax relief delayed
Craig Chapple

By Craig Chapple

March 20th 2013 at 2:28PM

But Government '100 per cent committed' to tax breaks as cultural test awaits European approval

Games tax relief will not be approved by April 1st as the UK awaits confirmation from Europe.

UK games trade body UKIE has stated that tax relief will still definitely happen, and the Government is “100 per cent committed” to legislation.

Tiga has also explained that tax relief is still awaiting State Aid clearance from the European Commission, but the government will still be legislating for the incentives in the current Finance Bill.

The delay in approval likely means the European Commission either still has questions to clarify in regards to the cultural test, or there has simply been a delay in getting around to the approval process.

Tax relief legislation, which the UK game industry has campaigned for for years, was finally expected to have been passed by April 1st for developers to start claiming tax incentives in an effort to boost the industry.

The incentives were proposed during Chancellor George Osborne's March Budget speech last year. In the Autumn statement announced last December, the government revealed that the game industry tax relief rate would be set at 25 per cent of qualifying expenditure.

The proposal for the cultural test was also introduced a few days later, which you can find here.

The cultural test, required under European law for government to implement State Aid, carried a number of tests which developers must pass to be eligible for tax relief - and it is this that is thought to have proved a sticking point for tax incentive approval.

In a statement, Ukie said it was disappointed with the delay, the news was somewhat expected given the unique nature of the game industry.

"We were prepared for this as it was always a possibility when establishing an entirely new European tax scheme, especially as games are so different to film and TV," said UKIE CEO Jo Twist.

"We are confident of the government’s commitment to implementing the tax breaks as soon as possible. But we hope that the delay will be a short one and shall now be doing everything that we can, working with UK government, the European Commission and Tiga, to get the state aid approval that we need as soon as possible. They absolutely will still happen."

Tiga CEO Richard Wilson said: "Although Games Tax Relief has not yet received State Aid clearance from the EU Commission, Tiga has been assured that the UK Government is committed to this Relief, will be legislating for this Relief in the Finance Bill and will deliver this Relief.

"Games tax relief is vitally important because its introduction will enable the UK to compete on a level playing field against our overseas competitors who already have tax breaks. Games tax relief will also power investment and job creation and address the market failure in the under-production of culturally British video games.

“Tiga stands ready to work with the UK Government and EU Commission to accelerate the introduction of games tax relief. Businesses need to see the measure introduced as soon as possible to aid commercial planning."