UPDATE: it seems as though the government has acknowledged this is an issue and that therefore it’ll take at least a year to get the tax break off the ground from an EU and practical perspective – I agree.
- What form will the games tax break take? Will it be based on the film tax break or somethng else? The TV industry is being given tax breaks too – will they have a different format the gamesindustry can follow? In any case, how will this be tailored to the unique features of the games industry? Just as importantly, what lessons can be learned from the implementation of the films tax credit?
- Given the EU legal considerations (see above), the key test for obtaining the tax break will probably be whether it would promote “culturally significant video games that might not otherwise be made in the UK“. The government will need to set out guidance as to what that means for games.
- That said, it does not just mean “GTA: Weston-Super-Mare”! A wider definition of ‘culturally significant’ has become widespread in the films industry and the same logic could be applied to games. For examples, maybe games which reflect European culture (e.g. Creative Assembly’s Empire: Total War) could qualify, or games which are just made in the UK (and thereby could be said to reflect UK culture even if they don’t specifically refer to the UK). In other words, the test could be whether the game is sufficiently linked to the UK and therefore to UK culture, not whether the games are about UK culture. In reality of course we just don’t know at this stage how that particular challenge will be resolved, but it will boil down to the government trying to tread a fine line between complying with the law while still making the tax relief useful. With the films tax credit, the government has adopted a points-based system when assessing this cultural question , which they could also do with games.
- Who will benefit from the tax break? There is a good case for arguing that both games developers and publishers based in the UK and overseas (provided the game is made in the UK) should be entitled to benefit so that the relief encourages both inward investment and the UK indigenous games industry to achieve its aims.
- How will games be defined for tax break purposes? Clearly, games must be defined broadly enough to encompass the myriad of games currently available (across an array of platforms) and those developed in the future. How will social and mobile games fit into it? There’s previously been lots of talk about how difficult this could be, and clearly a lot of thought will be needed – but it’s by no means impossible.
- How much will the tax break be worth? It needs to be high enough to encourage continued game development in the UK by existing players and new companies to start making games here, but not so high the Treasury balks at it.
- Lastly, what types of development spend will qualify for tax relief? How will this interact with the research and development tax reliefs?
- Who will administer the tax break? Will the government set up a new body or use an existing body? There was previously has been speculation that the Film Council could step in to adminster the games tax break, for example.