UK's Coalition considers gaming tax break U-turn

The Coalition is toying with the idea of tax breaks for the gaming industry.

After knocking the scheme, which was first introduced by Labour MP Alistair Darling in the Labour government’s last budget in March 2010, and describing it as “poorly targeted,” it seems George Osbourne is reconsidering.

The news follows a report in the Sunday Times which claims George Osbourne is preparing an “eye-catching” measure for the next budget report. It could be scrapping the NHS entirely and roping in amateur surgeons from garden centres. Or he could be planning to include £30 million of tax relief for the video games industry.

This would be slightly short of the £100 million mark the trade association representing the UK video games industry, TIGA, has long requested.

TIGA has plenty to say. It plans to intensify its campaign to persuade the government to introduce a range of measures to give the UK video games industry at least a 1-up.

Dr Richard Wilson, TIGA CEO, told TechEye: “Given the economic contraction in the last quarter of 2010, we need a budget for growth in March.

“The UK video games industry can play a part in rebalancing the UK economy away from an over-dependence upon financial services and the public sector. The UK game development sector provides high skilled employment, is R&D intensive and is an export oriented industry.

“It is just the kind of sector that the Government should be supporting if it is serious about strengthening the economic recovery.”

According to TIGA, over five years, Games Tax Relief will create or safeguard 9,519 direct and indirect jobs (including 3,366 jobs in the games industry), £431 million investment in development expenditure, £394 million in tax receipts to HM Treasury, at a cost of £194 million in tax relief to HM Treasury.

“TIGA is the only trade association to have consistently argued for Video Games Tax Relief – in public and in private,” Wilson tells us. “TIGA will continue to campaign aggressively for Video Games Tax Relief in the run up to the Budget.

“We will also urge the government to enhance the existing R&D tax breaks and to consider a series of other measures to power our industry forward. TIGA’s mission is to fight for the interests of the UK games industry and to make the UK the best place in the world to do games businesses.

“We urge game developers and publishers to join TIGA and to actively support our campaign in the weeks leading up to the Budget,” he added.

In 2009, the video games industry reportedly generated £2 billion of sales, added approximately £1 billion to the UK’s GDP, raised over £400 million for HM Treasury in tax revenues, and employed more than 28,000 people.

The news will be a welcome surprise to those disappointed with the Chancellor’s earlier decision. Back in June last year, Luciana Berger, a Labour MP for Wavertree, Liverpool called the lack of a gaming tax break “short-sighted.”

She added that the UK could be left without gaming talent as the best developers were leaving the UK and flocking to Canada and the USA.

The UK lost 700 jobs in the sector from 2008-09; a full seven percent of its work force, she added.

Mr Osbourne has reportedly been in touch with head honchos at games companies and offering his support. He’s due to report back with the budget review on the 23rd of March.