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BETA | UK TAX BREAKS


that originated in Europe/Britain? - Is the game in the English language? - Is it an original game that contributes to British culture? - Does it have a strong British story? - How innovative is the game? - Does the game reflect British culture,


creativity and/or heritage? - How much of the game is made in the UK? - Are the staff directing the project British or British citizens? After that, the points are totted up and either an exclusive yes/no or a sliding scale could decide how much qualifying projects get. It’s hard to know exactly how this works at this point – that’s what the consultation period should help hammer out. But pre-written proposals – plus the Film Tax Break – already exist, and will point the way forward.


ONCE IT’S LAW, WHAT WILL WE GET? First, let’s talk money. Preliminary figures from the Treasury say the games tax break fund will be £15m in year one and £35m in year two. However, can the industry argue for more cash during the consultation period? Vaizey isn’t sure. “Those numbers are rough


costs and they will be honed down during the consultation period so that the Treasury is confident about the cost implication of the tax credit. But people need to be realistic about what the Government can afford and what we can get out of the Treasury – we mustn’t ask for the Earth.” Most in the industry will argue that still,


£50m in two years isn’t much for video games – a couple of large-scale projects from big publishers would eat it all up. But the tax break would hopefully be


balanced enough to ensure that businesses of all scale get a crack at the applying for funds. Indeed, it’s likely the Government will know that this part will be closely watched and will have to support new businesses as well as incumbents. Indeed, TIGA says that the Government will get hundreds of proposals a year from studios big and small. TIGA’s proposal also draws a line in the sand


for big and small projects. It suggests a 20 per cent tax relief on production costs for games costing more than £3m to produce and 25 per cent on games costing between £50,000 and £3m. Expect this kind of reasoning to find its way into the final implementation of the Finance Bill next year. As for how the money is handed out…


Many in the industry predict a creative industries council would be established. This would be a group working with the DCMS, and perhaps including a few of its civil servants, that would organise where the money goes. TIGA of course wants its members in such a council. So does UKIE. Olswang, which was one of the organisations lobbying for the tax break, may do too. The creative industries council would cover TV, animation and film all together. It it would probably fill a quango hole left by the now abandoned UK Film Council. That said, the Government may hand over ruling power to an industry group Ian


20 | APRIL 2012


“In terms of what it means for the industry in the UK, it’s great to get some help to level out the internationally competitive marketplace. It’s no silver bullet though, and the inherent challenges of a sector changing so rapidly will continue to drive the successes and failures along the way.”


Pete Samuels, CEO, Supermassive Games


“Any type of funding or financial help coming into the UK has to be a good thing. But more than that though, the government formally recognising the games industry is a fantastic breakthrough.” Trevor Williams,


CEO, Playground Games


“The Devil is in the detail; unless the incentives are of a similar scale, easy to administer, applied fairly to both production and services as they are in Canada, I fear that this will just end up as more talk than action, and fail to reverse the brain drain.”


Richard Leinfellner, CEO, Babel Media


“This tax break provides an immediate boost to active businesses, whilst also supporting the long term development of the industry as a whole. Arguably, this decision has arrived late. We’re still confident though that with close cooperation between game developers and the government, we can re-establish the UK as a leader of the video games industry.” Imre Jele,


Creator-In-Chief, Bossa Studios


Livingstone chairs – there’s a chance this could be used to determine who gets what to avoid the formation of an extra body.


People need to be realistic about


what the Government can afford and what we can get out of the Treasury.


Ed Vaizey, DCMS But maybe thinking about the tax break in


purely fiscal terms is mistake. The Government has chosen the subsidy as part of an overall – and hugely Conservative-themed – strategy to ‘earn’ the country’s way back to the top of the world power league. “Do we watch the Brazils and Chinas of the


world power ahead of us? Do we want to be left behind?” said Chancellor George Osborne in his Budget speech. Indeed, the tax break is as much a statement of intent as it is an actual pot of gold.


“That’s an important point and why I’ve


always supported a tax break,” Vaizey tells Develop. “There are some people that argue a tax break is not fundamental to their business or it might not have an impact for online games forms, or so on. What it does definitely do over and above for all of the games industry is prove that we have policy showing the UK government takes the games industry seriously and wants to see investment there.”


BRILLIANT! SO THIS WILL HELP US SEE OFF THE CANADIAN MENACE, THEN? Well, no. The tax breaks won’t be as rewarding as they are in Canada. “We’ll never quite get to the level Canada


has,” says Vaizey. “If you did a line by line analysis to see you might be a little better off in another jurisdiction.” But he pushes that question back to the wider point – a tax break for games can offer a halo effect for the entire games industry. “If you add the UK tax break to our mix of


skills and creativity, plus the fact that a lot of studios in the US and Canada said to us that they are still interested in the UK… It’s a great incentive for companies to know that they will get all that support, plus access to Europe.”


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