Last week we had the guys over from Radio One to discuss the new tax break announcement for the UK Gaming industry, and its impact on how we make games in the UK.
We showed Jonathan @blakeyblogs around the studio, and gave them a run-down on Eden Star, where the team came from, and where we’re going with the game. Understanding how we work, and how passionate we are about the project, it gave some context to our opinions of the tax breaks and how they could help out both Indie teams and larger studios in the UK.
Check out the full article by clicking below!
As we like to share the info we know, here’s a basic overview of what the implications to the UK games industry are:
- Games that qualify will get a 25% tax credit on most of their production budget. This will normally work out to companies getting back about 20% of the cost to create the game.
- To qualify, a game has to pass the ‘Cultural Test’, to show that it contributes to British or European culture. Games have to get 16 out of a possible 31 points, in four areas: the content of the game (story, characters, underlying material etc); the cultural contribution (how it reflects UK heritage, diversity etc); where it was made; and the nationality of the people who made it.
- The relief can be claimed on expenditure from 1 April this year. However, the formal legislation still has to be passed now that European approval has been given, so companies will not be able to receive the money until later this year – likely August or September.
- If the game makes a profit, the relief can be used to reduce the profit that is reported, meaning that the company pays less corporation tax. If the game makes a loss, this loss can be ‘surrendered’ for a direct credit (payment) from HMRC. In both cases, the value of the relief or credit will work out to a maximum of around 20% of the game’s total budget.
- The relief is available to games of all types and sizes: there are no minimum or maximum budget limits, and it has been designed to be able to support games that continue to be developed after their initial release.
- The Treasury have estimated that the relief will provide about £35 million of support to the industry per year once it is fully in place, but this is NOT a cap on the amount they are willing to spend.
- Our friends at TIGA have estimated this will incentivise £188 million additional investment by games companies in the first five years.
- The tax relief will serve two important goals. Firstly, it makes the UK a far more attractive location for inward investment by large multinational publishers, allowing us to compete fairly with Canada and other countries that offer their own reliefs. However just as importantly, it will provide direct help to indies, meaning that with the right institutional support we have the potential to create a new golden age of independent development, in all different parts of the country.
- The UK’s existing heritage of games development, our incredible collection of talented developers, and the appealing business environment more broadly mean that we have the potential to become the world leaders in games development, thanks to this tax relief putting us on a level playing field.
Ukie have been instrumental in pushing through the tax breaks for the UK industry. Find out how Ukie have helped at the link below:
Ukie have fought hard for the introduction of Games Tax Relief since their formation in 2011. Their CEO Jo Twist, Chair Andy Payne and Vice Chair Ian Livingstone all played a fundamental role in getting tax breaks back on the agenda after the coalition government’s initial opposition.
However, this has only happened because of a united effort by the industry as a whole, and latterly in partnership with UK government. They have worked closely with TIGA and hundreds of companies across the UK to make sure that the tax breaks are designed in a way that reflects how games companies work and will be easy to use.
Thanks for reading, and we’ll be back soon with more news!