Video games tax relief
The proposed tax relief for the video games industry has been cancelled.
In the March 2010 Budget, the Government announced its intention to introduce a new tax relief for the developers of video games in the UK. It proposed to carry out a consultation later in 2010 to settle the detailed design for the relief but it was expected to be similar in form to the tax relief enjoyed by producers of British films. The news in March was welcomed by the video games industry, which had been lobbying for a relief to maintain and enhance the competitiveness of the UK as a location for development activity.
The Chancellor announced today that the new government will not proceed with the proposal for video game tax relief, which he described as 'poorly targeted'.
Who will be affected?
Developers of video games in the UK.
This is disappointing news for the UK video games industry. It was hoped that
the success achieved by similar reliefs in parts of Canada and France could be
replicated in the UK and would stem the flow of talent, investment and IP
development overseas. Although the UK industry continues to be a strong
performer, it has dropped from third in the world to fourth in the last two
years and the scale of games produced in the UK could follow.
The detailed design of the tax relief, however, may have posed practical problems, such as in the definition of a video game, qualifying activities or expenditure, as well as determining the requirements for ownership of IP.