TIGA, the games industry body, has published its election manifesto for the games industry, in which it sets out its proposals for how the recently announced games tax break should be structured in the next Parliamentary term (via Develop).
TIGA’s tax break proposals are as follows:
“The Government announced in the Budget on March 24 that it would introduce Games Tax Relief. TIGA believes that Games Tax Relief should be introduced as soon as possible.
It should have the following attributes:
1) Eligibility for the Games Tax Relief would cover any company within the scope of UK Corporation Tax.
2) Video games would need to pass a cultural test, scoring against criteria of European heritage and game locations, languages, technical or creative technological innovation, narrative, and location of development and key development staff.
3) The Games Tax Relief would be calculated and applied in a similar way to the existing tax relief for British films. A development company would be entitled to an additional deduction in computing their taxable profits equal to the UK expenditure incurred in developing a game, or 80 per cent of the total expenditure incurred in developing a game, whichever is the lower.
The development company would then be entitled to a tax credit calculated on the amount of the deduction, which it would either be set off against the income from the game or recovered as a payment from HMRC.
4) The Games Tax Relief should have three tiers of benefit: 20 per cent of core expenditure for budgets above £6,000,000, 25 per cent for budgets over £3,000,000 but less than £6,000,000 and 30 per cent for budgets of over £100,000 but under £3,000,000. The three tiers are designed to reflect average production budgets of video games on different games platforms, and correspondingly different sizes of company.
If Games Tax Relief is to assist the production of culturally British mobile games then it would be advisable to extend relief to games with a budget of £50,000 or more.
5) An independent organisation with knowledge and experience of video games production would administer the cultural tests, checking submission criteria are met and policing the Relief. It would issue interim certificates or letters of comfort confirming a product has passed or provisionally passed the cultural test to ensure candidate projects are funded.”
We’ll write a more detailed analysis of these propsals later on, but suffice to say they broadly accord with our views of the issues that the tax break will need to deal with.