TIGA proposes increase in VGTR to boost the UK’s video games industry

TIGA has published a new report, calling for an increase in Video Games Tax Relief (VGTR) from 25 per cent to 32 per cent.

The report, ‘Boosting the UK Video Games Industry: Increasing Video Games Tax Relief,’ analyses survey data from industry, data from government and economic modelling. The report states that a 32 per cent rate of VGTR would result in more investment, greater headcount growth and larger tax receipts for HM Treasury.

TIGA’s research demonstrates the link between VGTR and the growth in UK games development companies and industry headcount. Average headcount growth from 2014 (the date from which companies could claim VGTR) to April 2020 has been 8.9 per cent.

Additionally, a TIGA survey conducted in October 2020, showed that 80 per cent of respondents that were able to claim VGTR in the past 3 years had done so.

The tax relief was introduced partly to enable the UK video games industry to compete on a more level playing field with its counterparts in countries such as the USA and Canada, which benefit from a range of generous tax reliefs and grants.

The research suggests that an increased rate of VGTR to 32 per cent would have the following impacts between 2021 and 2015:

• 1,485 additional development staff in studios.
• 2,715 additional indirect staff.
• £255 million additional development expenditure.
• £233 million direct and indirect additional estimated tax contributions.
• £565 million additional estimated GDP contribution.

These figures are likely to be conservative, claims the report, as they do not take into account any impact of incremental start-up rate acceleration, acquisitions and additional inward investment that may be stimulated by such a material VGTR increase.

“The UK video games industry is one of the sectors that the UK Government should aim to promote over the coming years” said Dr Richard Wilson OBE, CEO of TIGA. “The industry supports economic growth in clusters throughout the UK: approximately 80 per cent of the workforce is based outside of London.

“The industry provides high skilled employment: around 80 per cent of the workforce are qualified to degree level or above. The industry is export focused: approximately 95 per cent of games studios export at least some of their content. The industry is relatively resilient to Coronavirus engendered lockdowns: as a digital sector work can be undertaken remotely.

“An Increase in the rate of VGTR would: enhance the appeal of the UK as a centre for games development; encourage investment; promote the development of new IP; boost studio formation and longevity; encourage employment creation; support economic growth across the UK; and enable our industry to secure a larger share of the global market for games production.”