UK games tax break: UKIE CEO Dr Jo Twist explains it all
Everything developers need to know
Dr Jo Twist, CEO of the British trade association UKIE, explains.
The long awaited games production tax credit will finally be here in April 2013, if all goes to plan, but many people in games development have questioned how much they will really benefit.
A lot of these questions come from mobile and tablet developers big and small, some of whom are making games for these platforms at much lower budgets than typical console games.
And it's not a surprise that people are asking this question: in France, you cannot claim for a tax credit unless your production budget is over 150,000.
Of course, many best-selling mobile games in this country are produced with budgets well in excess of that, and that's a trend that's set to continue as mobile technology improves and production values soar.
However, if we imposed a similar limit on tax credit, many mobile developers would not qualify. This must not happen.
On the same page
The great news is that the UK Government realises that our industry has changed as new ways to play evolve. They now know that production cycles (for example, how budgets are shaped by constant iteration), business and monetisation models are all changing and are likely to continue to change.
Free-to-play and in-app purchases dominant models for mobile games at the moment require ongoing updates, features and new releases: the tax production credits should be shaped to respond to this.
The right economic ecosystem in the UK is vital for all of us. We need more incentives for large studios, and big multinational businesses to find the UK attractive to set up business Activision's new mobile studio, for instance, is a sign that this is already happening.
But the ecosystem needs to be a level playing field for small and medium-sized businesses too from micro studios to start ups so that growth happens for all our games production.
Talking the talk
We have spent the last six months speaking to literally hundreds of people in games businesses throughout the UK, and many of them are clearly focussing on mobile platforms.
What came out of that was a number of points we gave to the Government: we said the rate of relief should be set at 30 percent for all UK games development. We said that there is no need for a minimum budget threshold for games to qualify for relief.
We called for assurances that the new business models and ways of making games that stretch beyond initial release are recognised, which means that businesses can claim for production costs for DLC or as games continue to be developed and iterated.
But this is only the first level: we need to wait until draft legislation is published near the end of 2012 to see if it the new system does what we all want.
The next level's challenge is in defining a Cultural Test that games will need to pass to qualify for the relief.
The need to qualify as a cultural product can seem frustrating but if we don't have it, we can't have the tax production credit.
The cultural aspect
European legalities are strict around State Aid. State Aid (or national governments giving local industries advantages through things like tax breaks) is actually illegal under European law.
It is only allowed in a few cases, one of which is if the tax breaks improve the cultural output of the particular country or Europe more generally. The French games tax relief and the UK film tax relief operate under these rules.
Now, that doesn't mean every game needs to have Beefeater NPCs. It does means that we all need to sense-check the questions in the Cultural Test that the Government has published, though. Think of it like a game in its own right.
The Government is proposing that you will need to score points for your games across four main areas: cultural content, cultural contribution, cultural hubs and cultural practitioners.
This means your game will get points for UK or European content and themes within games, and you will get points depending on whether the developers and people working on it are UK or European citizens, and if the studio is based in the UK.
Different questions have different points awarded: so who better to ask about how this test is designed and how top scores should work than game developers and designers.
A helping hand
So please, if you do one thing this month, help us design the best cultural test for our industry.
You can sign up for a seminar on 23 October held at UKIE HQ on Eventbrite. Any games companies can come.
Alternatively, you can fill out our questionnaire here, speak to us on Facebook, or send us your thoughts to consultations [at] ukie [dot] org [dot] uk.
We're going to be pushing hard to make sure all parts of the UK games industry benefit from this new economic ecosystem: together we can make sure that the growing UK mobile development sector can continue to make the most innovative, top quality games, at less cost.