UK Treasury promises tax break action

UK Treasury promises tax break action
Michael French

By Michael French

June 10th 2008 at 4:05PM

EXCLUSIVE: Brown's Government to 'collect and review' evidence for a production tax credit

Just weeks after the launch of the Games Up campaign – a lobbying effort backed by Tiga and ELSPA and sponsored by 15 leading UK games studios – the UK Government’s Treasury department has told Develop that it will help ‘collect and review’ evidence supporting the call for a games industry tax subsidy.

Announced officially late last month, Games Up is masterminded by a steering committee of SCEE, Frontier, Games Investor Consulting, Tiga and ELSPA.

The effort is focused on targeted campaigns to Parliamentarians and the media which has started with articles placed in the mainstream press using a PR agency. The effort will continue throughout the year with a wider national media campaign and lobbying of constituency members of parliament plus a series of events set to take place both before and after the Government’s summer recess.

The objective of the campaign is to educate the backbench MPs and policy makers about issues facing the games development sector when it comes to the state of the economy and education. Key messages include better collaboration between educators and industry, acknowledgment of the cultural and economic impact of the UK games industry, and – of course – pushing the Government to consider implementing a tax break for UK games firms.

And in response the Treasury has already revealed it is keenly looking into the matter, saying it will work with the industry to review the campaign’s cause.

A Treasury spokesperson told Develop: “The Government values the contribution of the UK’s creative industries to the economy and to the UK’s cultural richness. Any tax incentive must be supported by evidence, and following France’s recent approval of a cultural tax relief for games, the Government is now working with the UK gaming industry to collect and review the evidence for introducing such a credit in the UK.”

But as the industry watches on to see if the Government takes further action, the Treasury has also moved to remind UK studios that it already has some economic benefits in place via the ‘generous’ R&D tax credits.

The spokesperson added: “In ‘Creative Britain - New talents for the New Economy’ [the Government’s white paper published earlier this year] the Government committed to making sure that the creative industries, including the games sector, were aware of and made the best use of the generous Research and Development tax credits for small and medium-sized enterprises, introduced by the Government in 2000. The Government has already been promoting the credit within the industry.”

These comments from the Treasury following mounting pressure on the Government to seriously consider introducing a games development tax break - pressure which recently spilt over into the consumer domain with worried gamers starting a petition on the Prime Minister's official website calling for a tax break. Although now closed, over 2000 people from both in and outside the games industry signing it.

Today, the Treasury offered an official response to the petition - much of which reiterates the statements made above.

This latest response reads as folows:

The Government takes seriously the contribution of the UK's creative industries to the economy and to the UK's cultural richness. Creative Britain - New talents for the New Economy, published earlier this year, set out the 26 commitments with which the Government would support the creative industries.

In that document, the Government committed to making sure that the creative industries, including the games sector, were aware of and made the best use of the generous Research and Development tax credits for small and medium-sized enterprises, introduced by the Government in 2000. The Government has already been promoting the credit within the industry.

The Government must be mindful of the need to ensure fair competition and value for money for tax payers whilst ensuring that any tax incentives are supported by evidence. The Government is conscious of the recent approval of a cultural tax relief for games in France and is working with the UK industry to collect and review the evidence for introducing such a credit in the UK.