TIGA sets out design principles for Games Tax Relief

TIGA, the trade association representing the UK games industry, today published its response to the Government's Consultation on Creative Sector Tax Reliefs. TIGA recommended that the new Games Tax Relief (GTR) design should be underpinned by the principles of:

Helping small budget games as well as large projects
A flat rate of relief of 30 per cent on eligible projects
Relief for post-release costs
Eligibility for educational games

Dr Richard Wilson, TIGA CEO, said:

"TIGA aims to strengthen the UK video games sector and to ensure that the industry supports the wider economic recovery. If GTR is designed to support both small budget games and larger projects, provides a significant level of relief and incentivises continuous content creation, then we can achieve these objectives.

"Games are increasingly being developed as a service, with a large amount of the content being created and released post-launch, and the game evolving over time. So it is important that studios are able to claim relief on costs arising after the release of a game.

"TIGA strongly welcomes the growing political consensus in favour of GTR and the recognition by the UK Coalition Government of the economic and cultural importance of the video games industry. A well designed Games Tax Relief will power the industry forward and contribute to economic growth."

TIGA's Survey

Over 100 developers and digital publishers were polled

89% of respondents were opposed to a minimum spend threshold
52% of respondents prefer the idea of a uniform rate of relief
70% of respondents believe that debugging and maintenance costs that are incurred after the release of a game should qualify for relief
98% of respondents thought that educational video games should be eligible for Games Tax Relief

The Design of Games Tax Relief

TIGA believes Games Tax Relief should:

Be based on the Film Tax Relief
Support educational games
Support games based on in-game advertising and free-to-play business models
Be in effect from pre-production to post-launch support
Incentivise content creation post release - DLC, patches, updates, new content, modifications to game play and debugging
Not require a minimum spend threshold

Cultural test Due to the European Union, Games Tax Relief can only be implemented if it is accompanied by a cultural test. TIGA firmly believes that video games can be cultural products. They can reflect the society in which they are created. British video games developers can: generate iconic characters; create innovative new video games genres, narratives, art, music and use humour, science and learning innovations as vehicles for education.

The Government has not yet formally published its consultation document on the cultural test. However, TIGA has emphasised to the Government that the more developers and digital publishers can be given a degree of certainty as to whether a game will qualify in advance, the more effective Games Tax Relief will be.

Rates of Relief TIGA is seeking a single level of relief of 30 per cent. Alternatively, the Government could introduce two tiered rates of relief:

30 per cent for projects up to £250K
25 per cent for projects over 250K

The case for Games Tax Relief

The facts

Canada, France, Singapore & USA have tax relief for games production
No tax break exist in UK
UK sector declined by 10% since 2008
UK studio investment has fallen by £47m since 2008
41 per cent of the jobs lost to the UK dev sector have relocated overseas since 2009
Games being designed in UK but completed in countries with tax relief
Fewer titles with British cultural themes being produced

The opportunity

The proposed Games Tax Relief will enable UK video games developers and digital publishers over the next five years to:

Boost investment and job creation
Secure over 4,660 direct and indirect highly skilled jobs
Invest £188m in jobs and games development
Increase the games development sector's contribution to UK GDP by £283m
Contribute £172m to HM Treasury