UKIE makes final recommendations for games tax relief

UKIE makes final recommendations for games tax relief
Craig Chapple

By Craig Chapple

February 6th 2013 at 11:08AM

Trade body seeks clarification on legislation and makes last proposals as tax breaks draw near

UKIE has submitted its final recommendations to the government seeking clarification on a number areas of the UK games tax relief legislation.

The trade body stated it was broadly happy with the proposals already set out, which includes a 25 per cent tax relief rate, no minimum budget threshold and a recognition of post-release development as an eligible area for tax breaks.

UKIE has however called for clarification on some areas of the legislation, which you can find listed below.

Points of concern include how games using new business models such as free-to-play will receive post-launch support, whether educational games are eligible, what the make-up of the administrative team will look like and also suggests a review after the first year to see whether all areas of the game industry have been able to take advantage.

Points of clarification and recommendations made by UKIE are as follows:

•    The legislation must make it clear that businesses can claim for post-release development including relevant QA

•    It has to be clear how games using new business models, such as free-to-play and DLC-based content, will see post-release development supported

•    Ensure that games are recognised by definition as software, whether that be in the legislation itself or in guidance

•    It must be clear that all games intended for release can potentially qualify for the relief, including games for educational or training use

•    The cultural test administrative team must be well resourced with games expertise to meet likely high level of applications

•    The cultural test must include references to ‘underlying material’, and make it clear that this can include the concept for a game, even where the game does not rely on a narrative

•    There should be a review of how the relief is operating after its first year, to ensure it benefits all parts of the games industry

•    Government must start drafting the crucial HMRC Guidance document as soon as possible. This must include, amongst other things:

•    Clear explanation of how early-stage costs will be adjudicated
•    Advice on what forms of brand-funding and licensing will be acceptable
•    Transitional arrangements for games already in production at start of scheme
•    Interaction with R&D credits
•    How grants and subsidies will be netted off

“It is vital that we get the new tax relief system right from the very start,” said UKIE CEO Jo Twist.

“The new system needs to reflect how games are made today and support businesses, big and small. Whilst the proposed legislation looks good, we have pored over it in detail and talked with all parts of the industry to make sure it will operate as effectively for them as possible.

"We urge government to seriously consider the points made in our response, so that we have a system that will really help us compete more effectively with Canada, for example, as the best place to make and sell games and interactive entertainment.”

RIE Studios CEO of UK developers Jay Bedeau added: "For a small start-up like ours, having an effective tax break that we can really benefit from will make a big difference.

“We’re pleased to see that there is no minimum budget threshold for games to qualify for relief and we hope that government listens to the further points made by UKIE, particularly in making clear how QA in post-release development will be included, and that the UK games industry ends up with the world leading tax relief that this country needs alongside a flow of highly skilled talent into the industry.”

UK games tax relief is expected to be ratified and made accessible to developers across the country from April 1st.

For more information on eligibility, you can view the full cultural test here.