UK Enters Consultation Phase for Games Industry Tax Breaks

Hoping to spur innovation in its creative sectors, the government of the United Kingdom began consultation on possible tax breaks for the video game industry.

Her Majesty’s Treasury opened consultation on the idea yesterday and will hear and consider opinions until September 10. Any individual or organization can provide the government feedback during consultation, although it specifically seeks out comments from the industry.

These new tax breaks are part of a suite of new tax breaks intended by the government to promote both the economy and British culture.

Other sectors targeted for potential tax breaks include the animation industry and the high-end television industry.

Her Majesty’s Treasury had the following to say about its new tax breaks.

The Government is introducing reliefs for these creative industries with the combined aim of promoting the production of cultural products and encouraging investment in the UK. The Government wants to ensure that these reliefs are consistent with fiscal sustainability and deliver real additional investment without unnecessarily distorting behaviour or adding undue complexity to the tax system in a way that is consistent with fiscal sustainability.

This is not the first time that the government of the UK has introduced tax breaks to spur success in the creative sectors. Back in 2007, the UK introduced tax relief for filmmakers and has spent approximately £5 billion in promoting film creation.

Her Majesty’s Treasury seemed positive on the results of the film tax relief and hopes to copy that success here.

The film tax relief shows how targeted support for innovative, highly skilled, and mobile industries can make a real difference not only in terms of promoting economic growth, but also in terms of promoting British culture and the way the UK is viewed internationally. The scheme has been highly successful since its introduction in 2007, supporting £5 billion of investment into almost 600 British films.

Like the film tax relief, the aim of the reliefs for animation, high-end television, and video games is to provide tax reliefs that encourage investment into production in a way that ensures the sustainability of these industries and provides value for money for the British taxpayer.

The Treasury also outlined its criteria for any possible tax relief within the sector, stating that any new tax breaks must be effective, economically sustainable in the long-term, not open to abuse, and simple and straightforward without making the UK tax code much more complex. Tax breaks must also comply with the EU State Aid rules.

The specifics of the UK tax break plan for the video game industry can be read in Chapter 5 of the attached document at the end of the article. Gaming Bus previously reported on the UK’s tax breaks for the video game industry here.

Analysis: Money drives the world, so if you want to foster innovation, then money’s the way to do it. Right now, the UK’s riding off the wave of its popular film tax relief and looking for ways to expand that success. The world saw with its results in the movie industry that public monetary compensation for private creative expenditures can have a very noticeable impact on the industry’s health whilst also promoting a nation’s developing culture.

The specifics of the tax break, though, seem to focus only on giving money for finished products. While the proposal does provide alternate models for tax breaks that do target earlier stages of development, it seems like the government won’t be helping with start-up studios looking for initial capital for the most part, which could make the government miss out on a lot of indie releases. Furthermore, they’re also considering adding a £50,000 expenditure threshold to be eligible, and while that really isn’t all that much, it does highlight that the UK is focusing more on larger budget titles intended for wide release than on small indie games that will probably see only digital distribution.

Ultimately, it’s an interesting bid by the UK to try and make its gaming industry less of the third-wheel that it is, and if it works, then maybe we’ll be seeing Civilisation instead of Civilization sometime soon.

Consult Creative Sector Tax Reliefs 180612

Connor Horn

About Connor Horn

Connor is a laid-back long-haired California hipster who listens to music "you'll never find on the radio" and who voted for Ron Paul to "make a difference." His favorite kind of games are MOBAs and rogue-likes, and he is a huge fan of PC gaming and the future of digital distribution.