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TIGA Renews Games Tax Relief Evidence

Games Tax Relief could create and safeguard 3,366 development jobs and£431 million investment

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TIGA, the trade association representing the UK games industry, today released new evidence to support its campaign for the introduction of Games Tax Relief for the UK games development community.

The 85-page document is a second edition of the evidence submitted to the Labour Government in 2008, following their call for evidence to support a cultural tax break for games production. The report was written by TIGA, Osborne Clarke and Games Investor Consulting, the independent games research company, who carried out the empirical research, including a census of over 80 per cent of known British games development and publishing companies.

The report finds that:

The UK video games development sector faces significant challenges

    <*>Headcount has fallen by 9 per cent since 2008. <*>Between 2008 and September 2010 the UK video games development industry’s direct and indirect contribution in tax revenues fell by a total of?55million and the sector’s contribution to GDP declined by?132million. <*>Over the last 2 years, overseas government support for video games development has continued to grow, leaving the UK games industry competing on a highly uneven international playing field. Over 20 states within the USA alone now provide incentives for the video games industry.
Games Tax Relief would create over 1,300 new studio jobs
    <*>The Games Tax Relief is expected over 5 years to create a net 1,328 new jobs in the studio sector, increasing investment in games studios by?138millon. <*>2,427 indirect jobs? would also be created with annual tax revenues rising by?126million and GDP contribution by?307million. <*>This measure will drive sustained growth in the UK studio sector, and assist in halting the decline in investment in British studio jobs. Without a tax relief, current rates of decline would persist, leading to a further 24 per cent contraction in headcount between 2010 and 2015 (contributing to an aggregate 30 per cent fall since 2008). <*>Over 5 years, the Games Tax Relief is projected to save a further 2,038 direct jobs and 3,726 indirect jobs,?293million in development expenditure,?267million in tax revenues and?649million in GDP contributions, currently under threat from continued decline if a Games Tax Relief is not enacted. <*>In total, over 5 years, Games Tax Relief would create or safeguard 9,519 direct and indirect jobs (including 3,366 jobs in the games industry),?431 million investment in development expenditure,?394 million in tax receipts to HM Treasury, at a cost of?194 million in tax relief to HM Treasury. In other words, Games Tax Relief more than pays for itself.
Structure and implementation of the relief:
    <*>Games Tax Relief would cover: any games development businesses falling within the scope of UK corporation tax that develop a game with a budget of at least?100,000 and which pass a cultural test. <*>The tax relief would be calculated and applied in a similar way to the existing tax relief for British films. <*>The tax relief is proportionate and designed to help all kinds of studios– small firms would benefit most and loss-making companies would also benefit.
Commenting on the report TIGA CEO, Dr. Richard Wilson said:

“The UK videogames industry is an industry of the future - high tech, highly skilled and export oriented.? If the Coalition Government is serious about its intention of rebalancing the economy then it should invest in the UK video games industry by introducing a tax break for games production. Games Tax Relief would create jobs, boost investment and generate much needed tax revenue for the Government.?“The Coalition Government recognises the effectiveness of tax breaks because it already supports the UK film industry with a tax credit. It should adopt the same successful policy for the video games industry to enable our sector to make a powerful contribution to UK economic growth.”

Jason Kingsley, TIGA Chairman and CEO and Creative Director of Rebellion, said:

“The global video games market is expected to grow from $52.5 billion in 2009 to $86.8 billion in 2014. . However this growth will happen overseas if we do not invest today. The UK is exceptionally good at developing videogames but we are not competing on a level playing field. Other governments around the world are backing their video games industries. The UK Coalition Government is not. Of course the Government must tackle the deficit, but it must also have a strategy for growth. TIGA’s Games Tax Relief will support economic growth and tax revenues. We urge the Government to review our evidence and reopen the discussions on Games Tax Relief.”

Jason Kingsley added:

“The Government should also improve the existing R&D tax credit scheme. TIGA recommends that the existing R&D tax credit for large firms should be retained. Regarding the R&D tax credit for small firms, the categories of qualifying expenditure should be widened, the level of relief raised, the value of the relief for loss making companies increased, and the claim process simplified.”

Ends

Notes to editors:

About TIGA:

TIGA is the trade association representing the UK’s games industry. The majority of our members are either independent games developers or in-house publisher owned developers. We also have games publishers, outsourcing companies, technology businesses and universities amongst our membership. TIGA was awarded‘Trade Association of the Year’ and the‘Member Recruitment Award’ at the Trade Association Forum Best Practice Awards 2010. TIGA has also been named as a finalist in the 2010 Chartered Management Institute (CMI) National Management and Leadership Awards in the category of‘The Outstanding Organisation of the Year Award (SME)’. TIGA is an‘Investors in People’ accredited organisation.

TIGA's vision is to make the UK the best place in the world to do games business.? We focus on three sets of activities: political representation, generating media coverage and developing services that enhance the competitiveness of our members.? This means that TIGA members are effectively represented in the corridors of power, their voice is heard in the media and they receive benefits that make a material difference to their businesses, including a reduction in costs and improved commercial opportunities.

For further information, please contact Eva Field, TIGA PR Manager on: 07814 039 983, or email eva@tiga.org.?

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