UK Chancellor Alastair Darling has rejected granting a tax break to the games industry. It had been hoped that his Pre Budget Report (more on that here) would introduce the tax break, which has been the subject of substantial lobbying from the games industry and has received cross-party political support. This result will of course be disappointing to the industry, but not entirely unexpected.
“It is incredibly disappointing that after months of lobbying from the games industry the Government has rejected our calls for a tax break to incentivise games development in the UK. The UK’s position as a world leader has been eroded as other countries such as France and Canada encourage both games companies and our creative talent to relocate with the offer of targeted tax breaks. The effect of such continued corporate migration would be a loss of revenues derived from the profitable games industry for the Treasury. In my view we should be encouraging new and innovative games to be made in the UK. Cross party political support for this area remains strong and I will continue to lobby alongside the industry to keep this on the political agenda. I hope that we will be able to persuade the Government to extend the existing film tax credit regime to games on the basis we described in our recent paper.
There was a small piece of good news for the industry because changes have been made to the R&D rules which remove the IP ownership requirement for SMEs which should make it easier for games companies to claim R&D tax credits on their development spend.”