Ukie broadly happy with first look at proposed games tax relief scheme

 
We are broadly happy with the draft legislation published today that outlines how the new game industry tax relief system will work.
 
Main headlines from the draft legislation:

  • Proposed rate of production tax relief set at 25% for all UK games development (as announced in last week’s Chancellor’s Autumn Statement)
  • No minimum budget threshold for games to qualify for relief
  • The proposed tax relief scheme recognises the new business models and ways of making games which stretches beyond ‘release’
  • Main industry recommendations for the Cultural Test element of the tax relief scheme seem to have been accepted
  • There will be a full consultation on the draft proposal

Following last week’s revealing of the proposed 25% rate of relief for the games industry, we are pleased to see that government seems to have listened to many of the other industry recommendations made by Ukie in the consultation process.

We have stated that key to the success of the scheme is their call for the legislation to support all parts of the industry; and government seem to have recognised that it is vital for the new system to encourage growth from small independent studios, existing bigger studios and also attract inward investment from multi-national companies.

We were also pleased that government has recognised the new business models and ways of making games which stretch beyond ‘release’. We believe that being able to claim for production costs incurred for DLC or ongoing, post-launch costs will give the UK a big competitive advantage over many other countries. Positive as well was the confirmation of no budget threshold for qualification, helping games development projects of all sizes to benefit from the tax relief.

This follows on from last week’s announcement of the proposed rate of relief. Whilst the industry called for a 30% rate of relief for the scheme, Ukie was nonetheless pleased to see the rate set at 25%, giving the games sector parity with other UK creative industries.

We also broadly welcomed the proposed outline for the Cultural Test element of the tax relief scheme, although this is still awaiting clearance from the European Commission. Ukie will be working hard in the UK and at a European level to ensure that the Cultural Test operates as effectively as possible for British games businesses.

Ukie CEO, Dr Jo Twist said: “We’re pleased that an initial look at the draft legislation seems to be another positive step for our members and the wider industry, helping us to keep the UK as a leading creative force for games on the global stage.”

“It is however vital that we properly scrutinise every detail of the legislation to make sure that the final scheme is in line with the needs of our industry. We need all games businesses to feed-back their thoughts over the next three months so that we can ensure that we have the best possible system operating for all UK games businesses. As before we’ll be reaching out to TIGA to make sure that there is a single message to government and we’ll be holding an open session in January to discuss the draft proposal – all games businesses are welcome to join us and they can sign up by contacting consultations@ukie.org.uk.”

“We are also planning a major campaign next year to educate and offer practical support for all the UK games companies that want to benefit from the system once it’s in place so we can once again lead the world in games production.”

Ukie Vice Chairman and Life President of Eidos, Ian Livingstone said: “Following all the hard work that so many people have put in to getting tax relief for the games industry, it’s great to see real progress being made. As an industry, we need to continue to work hard with government over the next few months to ensure that we have the best possible tax relief system in place as soon as possible.”

Ukie chairman, lead at AppyNation, Chair of Mastertronic and Just Flight, Andy Payne said: “It is vital that these production tax credits work for small UK based companies. For too long now our talent has been fighting with one hand tied behind its backs whilst the rest of the world has focused in on winning sectors. Innovation will always come from smaller, more nimble teams, and this measure will enable us to take measured risks and build sustainable teams, creating growth and jobs that the country needs.”

CEO of MakieLabs, Alice Taylor said: “It’s essential that these tax breaks will work for small start-ups like us too. It will give the UK the level playing field that we need: to be able to bootstrap, to grow, to attract in the right talent, and to build the sort of cutting-edge innovation-led companies that this country has always done so well to produce.”

CEO of Splash Damage, Paul Wedgwood said: ”Whilst we welcome the introduction of tax breaks, it is essential that the system works not just for AAA studios like Splash Damage, but for smaller up and coming studios too. As an industry we must continue to work with the government to ensure that the new legislation does just this.”

Peter Hepworth, Managing Director, UK & Ireland for Activision Blizzard, commented: “Activision has always valued UK development talent, most recently investing in The Blast Furnace, a new mobile games studio in Leeds. Having fiscal incentives in place will enable us to continue to create great games in the UK and make developing here an attractive proposition for global games businesses.”

Vice President and General Manager Northern Europe, EA, Keith Ramsdale said: Vice President and General Manager Northern Europe, EA, Keith Ramsdale said: “EA has a long history of games development in the UK and has long recognized this country as a creative hub for entertainment. Today’s news is a positive step to encourage multinationals like EA to maintain a presence here, and continue to create games and services for a global consumer audience.”

Ukie spoke to more than 200 game businesses over the summer via working groups, face to face meetings, regional seminars, and online consultations (via Facebook, Twitter and a survey) to ensure all voices were represented in the conversation. The team also had constant contact and meetings with officials at HMT and DCMS throughout the process, shared drafts of the response with Tiga and convened meetings with Tiga representatives to ensure a consistent message and voice was presented to government at all times.

Games businesses can sign up for the Ukie Tax breaks roundtable to be held on 22 January at 10am.