TIGA's quest for Games Tax Relief has been rather like courting a beautiful girl to go out on a date.
She's moved from saying "not a chance" to "I'd love to but I can't make tonight" to "Yes, if my big European brother says it's OK".
TIGA's amorous pursuit of Games Tax Relief has been a long, arduous, seven year campaign. We have faced opposition from pundits, publishers and politicians. We have finally succeeded. We have won our date.
We first secured the policy in the Labour Government's final Budget in March 2010, only for it to be dropped in the June 2010 Budget by the Coalition Government. Undaunted, TIGA resumed its campaign for Games Tax Relief, and after another 18 months of relentless work, convinced the UK Government to back the measure in the Coalition's March 2012 Budget.
Another obstacle appeared when Games Tax Relief was then blocked by the EU Commission, announcing a formal investigation into the proposal in April 2013, citing concerns including video games not being culturally equal to film, and thus not deserving of the same or similar tax breaks, in addition to the potential for the programme to distort the EU's internal market.
Undeterred, we submitted extensive and compelling evidence to the Commission, co-ordinating its efforts with the Government and our partners in the European Games Developers' Federation (EDGF) to successfully assuage all of the EU Commission's concerns.
This culminated in today's announcement in the Budget that Games Tax Relief has at long last been officially approved and can now be set into motion.
No mean feat
Game developers in many countries receive tax breaks for games production, without them in the UK our industry has declined.
Between 2008 and 2011, employment in the sector fell by over 10 per cent and investment by £48 million. Games Tax Relief will power growth in our industry. Secondly, TIGA won Games Tax Relief despite the Coalition Government's strategy of economic austerity, which is manifested in a restrictive fiscal policy.
Thirdly, TIGA, working with MPs and MSPs of all political parties, convinced the Coalition Government to change course. Fourthly, working with the UK Government and the EDGF, we have addressed the EU Commission's initial concerns and opposition to Games Tax Relief.
But what does Games Tax Relief mean in practice? In TIGA's view, it's good for games studios, it is good for the games industry and it is good for the wider UK economy too.
The main reason it's good for games studios is because it effectively reduces development costs on those video games that qualify, having passed the cultural test. This means more UK games studios will be able to compete on a more level playing field with our overseas rivals.
Games Tax Relief will also effectively improve access to finance for many games development studios. This in turn will enable more studios to innovate and to develop their own IP.
What about mobile studios?
Games Tax Relief isn't just for multi-million pound console game projects, it will also help mobile games developers too the core reason for this being that there is no minimum spend threshold, so smaller game projects can benefit.
And also the fact that tax relief is available on both pre-production and post-release development costs (e.g. any spend on designing, developing and producing a video game), although you can't claim for expenditure on debugging or maintenance on a completed' game.
Some more info:
- There is a flexible cultural test which games have to pass in order to benefit from Games Tax Relief, e.g. points will be awarded in the test if the game uses the English language and if it is set in the UK/a fictional setting;
- Following a successful claim for Games Tax Relief, HMRC will pay back the amount in the form of a tax credit, which can be used to reduce a business's corporation tax liability; and/or
- Alternatively, if the game qualifies for Games Tax Relief, passes the cultural test but makes a loss then the company will be able to claim a credit back from HMRC.
The bigger picture
Ultimately Games Tax Relief is good for the UK games industry because it will result in an increase in jobs, projects and investment.
Our research indicates that Games Tax Relief will create and/or protect 4,661 direct and indirect jobs; encourage approximately £188 million additional investment expenditure by UK studios; generate £172 million in new and protected tax receipts to HM Treasury, and all at a cost of just £96 million over five years.
To give just one example, Eden Films plans to build a new games studio, Codec Studios, and to develop a new £30 million video game. Based in central London, Codec will employ over 100 highly skilled development staff for a minimum of three years. This investment and others like it will take place thanks to the introduction of Games Tax Relief.
Of course Games Tax Relief is also good for the UK economy. It will help to play a part in rebalancing the UK economy away from an over-reliance on financial services towards a highly skilled, high-tech, R&D intensive and global-export focused industry.
So what should you do next?
Any games business that wants to find our more about Games Tax Relief can contact TIGA at email@example.com TIGA can recommend several excellent accountancy firms with a good knowledge of video games and an expertise in claiming tax relief.
We have also worked with Kingston Smith to produce a two page flyer with some key information to help you get started which you can find here, and also some topline tips on our website here.
You can find out more about how to benefit from Games Tax Relief at TIGA's Sheffield event on 15 May 2014. TIGA will be publishing further briefing documents and guides on Games Tax Relief, as well as holding multiple seminars on how to claim Games Tax Relief. Please keep an eye on the TIGA website, especially our events page, for more info.
We'd like to say thank you and congratulations to everyone that helped win Games Tax Relief for gthe UK games industry.
The EU Commission is to be commended for giving Games Tax Relief the green light. The UK Coalition Government, The All Party Computer and Video Games Industry Group in the Westminster Parliament, the Cross Party Group on Video Games Technology in Holyrood, the Labour Party, the Scottish National Party and the EDGF also all deserve full recognition for their ongoing support for this critical measure.
TIGA, by fighting for and winning Games Tax Relief, has ensured that developers and digital publishers will in future compete on a more level international playing field, improved access to finance and given a stimulus to investment and job creation in the games industry.
It is great news for players, developers, and the United Kingdom. It was worth pursuing that date.
Dr. Richard Wilson is CEO of TIGA, the trade association representing the UK's games industry.