Government should invest in the Video Games Sector as part of a Strategy for Growth

TIGA, the trade association representing the UK games industry, today called on the Government to recognise the importance of the highly skilled, high tech video games industry and invest in it as part of a strategy for growth in the forthcoming Budget.  TIGA made the call in its Budget submission ‘Budget for Growth: Powering the Video Games Sector to Support the Economic Recovery’.

The UK games industry is a vital sector within the creative industries. The games development sector contributes approximately£1 billion to UK Gross Domestic Product (GDP) and employs 9,000 highly skilled development staff. 85 per cent of the development workforce is employed outside of London, typically in small and medium-sized enterprises.

TIGA’s submission includes detailed proposals for the introduction of Games Tax Relief, enhancements to the R&D tax credits system, measures to support prototype funding, changes to Venture Capital Trusts and the Enterprise Investment Scheme, and incentives to support Games Clusters.

Dr. Richard Wilson, TIGA CEO, commented:

“It is essential that Games Tax Relief is included in the forthcoming Budget. The games sector is highly skilled, high tech and export orientated. This is precisely the sort of industry the Chancellor needs to support if he is to produce a successful transition from economic uncertainty to economic prosperity.

“In total, over 5 years, TIGA’s Games Tax Relief proposal would create or safeguard 9,519 direct and indirect jobs (including 3,366 jobs in the games industry),£431 million investment in development expenditure and£394 million in tax receipts to HM Treasury. But it would cost just£194 million in tax relief to HM Treasury. In other words, Games Tax Relief more than pays for itself. We call on the Chancellor to support the games sector and introduce Games Tax Relief in the Budget.”

“The Government should also enhance the existing R&D tax credits. TIGA’s recommendations include the proposal that the scope of the R&D tax credits should be widened to enable businesses to claim for the costs of premises, design and IP protection. Additionally, the level of qualifying relief should be raised from 175 per cent to 200 per cent: this would ensure that for every pound that a business spends of qualifying expenditure it would get two pounds of tax deduction which it would use to reduce its corporation tax. These reforms to the R&D tax credits would thus enable games studios to employ more people, carry out more R&D and develop more IP.”

Jason Kingsley, TIGA Chairman and CEO and Creative Director of Rebellion, said:

“This submission provides the Chancellor with a number of opportunities to invest in the UK games industry. Games Tax Relief is the most attractive option in terms of providing future growth for our industry. Furthermore, this report suggests sensible changes to the R&D tax credits system which will enable developers to invest in more R&D in the UK. The Government has a wonderful opportunity at this Budget to support the games industry and so benefit the wider UK economy. It is imperative the Government takes it.”

The Rt Hon Stephen Timms MP, the Member for East Ham, Former Chief Secretary to the Treasury, and All Party Parliamentary Computer and Video Games Industry Group Member, commented:

“In Government we recognised the growth potential of the video games industry and proposed a targeted tax relief to help the sector to grow and create hundreds of highly skilled jobs in the UK.

“The Coalition Government made the short-sighted decision to scrap this help - despite supporting such a tax relief in opposition. It has an opportunity in the Budget to reverse this decision which will benefit developers across the country. I urge them to take it.”

Stewart Hosie MP, the SNP Member for Dundee East and All Party Parliamentary Computer and Video Games Industry Group Vice-Chair, commented:

“We also support the introduction of Games Tax Relief and other TIGA initiatives to offer incentives to support a Scottish Games cluster.”

Chris White MP, the Conservative Member for Warwick and Leamington and All Party Parliamentary Computer and Video Games Industry Group Member, commented:

“The UK is already a world leader in the industry, but if we are to retain this position the Government needs to provide as much to the industry as possible. I hope that the Chancellor looks at this report carefully and works with the sector to achieve the best possible outcome for the West Midlands and the wider UK economy.”

TIGA made the following key recommendations in its Budget submission:

    <*>Introduce TIGA’s Video Games Tax Relief. <*>Enhance the R&D tax credits. <*>Introduce a pilot SME Training Tax Relief to enable small businesses to offset expenditure on training, continuous professional development and education outreach activities against corporation tax. <*>Promote greater choice and competition in the banking sector. <*>Extend the Patent Box proposal to cover a Royalty Box tax provision with royalty income taxed at a lower rate. <*>Extend the National Insurance Contributions holiday to businesses in London, the South East and the East of England. <*>Reduce tuition fees for students studying mathematics and computer science degrees. <*>Review the deployment of lottery funding and consider using some of this money to invest in the UK video games industry, including prototype funding. <*>Expand and enhance UKT&I’s Tradeshow Access Programme (TAP) to help exporters. <*>Increase the size of investments that are permitted in Venture Capital Trusts and the Enterprise Investment Scheme (EIS); and raise the employee limit under EIS to at least 100; <*>Support games clusters by, for example, waiving commercial rates for 24 months for start-ups.

 

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Notes to editors:

About TIGA:

TIGA is the trade association representing the UK’s games industry. The majority of our members are either independent games developers or in-house publisher owned developers. We also have games publishers, outsourcing companies, technology businesses and universities amongst our membership. TIGA was awarded‘Trade Association of the Year’ and the‘Member Recruitment Award’ at the Trade Association Forum Best Practice Awards 2010. TIGA has also been named as a finalist in the 2010 Chartered Management Institute (CMI) National Management and Leadership Awards in the category of‘The Outstanding Organisation of the Year Award (SME)’. TIGA is an‘Investors in People’ accredited organisation.

TIGA's vision is to make the UK the best place in the world to do games business.  We focus on three sets of activities: political representation, generating media coverage and developing services that enhance the competitiveness of our members.  This means that TIGA members are effectively represented in the corridors of power, their voice is heard in the media and they receive benefits that make a material difference to their businesses, including a reduction in costs and improved commercial opportunities.

Budget for Growth: Powering the Video Games Sector to Support the Economic Recovery’ is available from the TIGA website ( www.tiga.org).

For further information, please contact Dr Richard Wilson, TIGA CEO on 07875939643: or email richard.wilson@tiga.org; o r contact David Hodges on 02070911653 


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