UK government closes door on games tax relief

Any naïve hopes that the games industry would somehow escape the coalition government's attempt to tackle the deficit have been dispelled today, with news breaking that chancellor of the exchequer George Osborne plans to shelve Labour's planned tax relief.

Osborne delivered the news in succinct form during his budget speech in the commons, simply commenting that "planned tax relief for the videogames industry will be cancelled".

Promises, promises

Before the election, both the Conservatives and Liberal Democrats had claimed to be behind the move to offer tax breaks to the games industry, with the promise having been made by former chancellor Alistair Darling during his last budget statement.

However, the move to abolish the proposal is just one of a wider slate of initiatives designed to cut back on non-essential Government spending in the wake of the country's budget deficit.

The tax relief, which would have come into force during 2011, would have been worth £90 million during its first two years.

Profitable developers would have paid less tax on their profits, with struggling developers having been offered assistance to reduce their losses and keep them above water.

Trade association TIGA believes game development in the UK currently contributes around £1 billion to the UK's GDP.