TIGA Calls for More Funding to Achieve Level Playing Field

Based on a new report, TIGA is calling for an increase in tax breaks in the UK and a separate Independent Games Tax Credit. Only then will the UK, where unlike Germany there is tax-based game funding, be on a level playing field in international competition.

At first glance, the Economic Impact Assessment of the UK Video Games Industry commissioned by TIGA appears very positive. It estimates the gross value added of the British games industry at £12 billion, around €13.84 million. The industry supports 73,000 jobs, including 28,000 developers, and generates £2.2 billion – around €2.54 billion – in tax revenue.  And yet there is a massive problem. According to the report, the British gaming industry is not on a level playing field in international competition.

This may sound surprising from a German perspective, as the industry in this country is still fighting for a tax-based subsidy model that has long been in place in the UK. According to the report, however, the Video Games Expenditure Credit in the UK has an effectiveness problem. Although it grants tax breaks of 34%, studios only receive 20.4% relief due to restrictions on what costs are eligible for deduction after taxes. In comparison, according to TIGA, French and Australian developers would receive an effective 30% relief through the programs in place there. Quebec even has an effective relief rate of 31.9%.

"The UK games development industry provides high skilled employment, supports regional economic growth and is export focused. Our sector is a success story with considerable potential. However, our industry is not competing on a level playing field and we are at a disadvantage in the competition for inward investment because our existing VGEC is not as generous as some of the tax incentives available in other jurisdictions," says Dr. Richard Wilson OBE, CEO von TIGA.

And Jason Kingsley CBE, TIGA Chairman and CEO/Co-Founder of Rebellion, added: "From AAA blockbusters to groundbreaking indie titles, UK games studios are world class – but the competitive pressures are intense. This landmark report shows that modest improvements to VGEC would deliver thousands of jobs, unlock new investment and crucially pay for themselves. If we want to secure the UK’s place at the forefront of the global games industry, the Government must seize this opportunity and back our studios to grow."

To improve the situation, TIGA has put forward several proposals. The VGEC relief rate is to be raised from 34% to 39%. At the same time, the proportion of eligible costs is to be increased from the current 80% to 100%. According to TIGA, both measures would create almost 17,000 new jobs, including 2,000 positions for developers.

The association also suggests introducing further support in the form of the Independent Games Tax Credit. This would provide a relief rate of 53% for 80% of eligible costs for productions with a volume of up to £23.5 million, or €27.09 million. According to TIGA, this would cost the British budget £135 million, but generate £156.4 million in additional tax revenue.