BETA | UK TAX BREAKS After the party
With the celebrations about UK games developers getting tax breaks out of the way, what happens next? The Develop team finds out
After several years of trying to win over the UK government, tax breaks are finally coming for studios based in the country
INSTANT REACTION TOthe 2012 UK Budget, which announced plans for a games production tax break, was of course jubilant. But across the swathes of quotes and
testimonials the Develop team collated in the days following March 21st, one lingering question remained for most in the industry: what happens next? And then, as many said to us: “The Devil’s In
The Details”. A tax break for video games made in the UK has been long fought for. While Canadian provinces have exploded off the back of state subsidies, British games development has fractured and shrunk. We are still strong, but we are weaker than we once were. So can a tax break rejuvenate the United
Kingdom’s games industry? What has to happen to get the tax break from proposal to law? And how will it be implemented? Develop, with help from the Department for
Culture Media and Sport, UKIE and TIGA, plus studios large and small from across the UK, has some answers. You might not like all of them, but you need to know.
18 | APRIL 2012
FIRSTLY: WHY DID THE GOVERNMENT CHANGE ITS MIND? The industry was told it was getting tax breaks back in 2010 by the eventually outgoing Labour government. Then the Lib Dem/Conservative coalition government cancelled that. Why the U-turn? The question is answered best by Ed Vaizey,
Minister for Culture, Communications and Creative Industries at Westminster’s DCMS. He says that along with mounting lobbying
from the games industry, “some big companies made it quite clear they would seriously consider investing heavily in the UK if there was a tax break. Big TV companies on the West Coast of the US said they would be interested too, as did the animation outfits. “So it has been a coalition of the willing, that put together a very convincing case to the Treasury.” Plus, the Chancellor saw the opportunity for something bigger than ‘just’ a games tax break, says Vaizey. When the coalition first pushed aside Labour’s tax break, it was described as poorly targeted. The new one
should coincide with similar tax credits for animation and TV firms. “Two years ago the Chancellor’s other
concern was’ can you give a tax break to one sector when the converged world of TV, film, games and animation is much bigger?’. One tax break for games – he just wasn’t convinced. But also the economic climate at the time was on his mind. The bigger win, the bigger tax break we are moving towards, is much more attractive to him.” Other motivations came into play, too, says
Vaizey: “A lot of studios in the US and Canada said to us that they are still interested. Even though they are in Canada, they see the UK as a potential European hub. That all adds to the attraction of the tax break. It’s a great incentive for companies to know that they will get all that support, plus access to Europe.” Certainly, the bosses of entertainment and games firms were delighted by the news: “This announcement is great news for the
UK’s creative industries,” said Josh Berger, president and managing director, Warner Bros. Entertainment UK, Ireland and Spain.
DEVELOP-ONLINE.NET
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