A trade association urges the implementation of enhanced tax credits to bolster the "disadvantaged" industry in the UK

The organization TIGA is urging the implementation of more robust tax incentives to support the growth of the UK's gaming sector.

According to a detailed report by TIGA, introducing a 53% tax credit for video game projects with budgets not exceeding $32 million (£23.5 million) could significantly aid in the development and expansion of small game studios.

This report, which highlights the vital role of the gaming sector within the UK economy, offers a strong argument for enhancing the existing Video Games Expenditure Credit (VGEC). TIGA's report was conducted by academics from the University of Portsmouth, including Professor Homagni Choudhury, Professor Joe Cox, and Dr. Alan Leonard. It argues for immediate reforms to allow the industry to remain competitive globally, asserting that the proposed changes would be self-funding, with increased tax revenue balancing the initial costs to HMRC.

Findings suggest the UK video game industry is crucial for the country’s economic success, supporting over 73,000 jobs and aiding regional economic growth. However, it faces challenges in securing inward investments due to less favorable conditions compared to international counterparts.

The report points out that other countries like France, Australia, and Quebec offer more appealing tax reliefs than the UK’s current effective rate of 20.4%. Moreover, with a majority of UK studios being very small, with fewer than five employees, emerging companies find it difficult to obtain funding because of uncertain commercial outcomes and limited financial histories.

To address these challenges, TIGA proposes the introduction of an independent games tax credit (IGTC) with a rate of 53% applicable to 80% of eligible expenses for projects up to £23.5 million. This initiative is expected to enhance the Gross Value Added (GVA) by an estimated £482 million and potentially generate around 7,000 jobs.

Dr. Richard Wilson OBE, CEO of TIGA, stated that the UK games development sector not only provides employment in skilled areas but also contributes to regional economic progress and focuses on exports. He emphasized that despite the sector's impressive achievements and potential, it is disadvantaged in securing inward investments due to less generous tax incentives compared to other countries. Additionally, many small and medium-sized enterprises (SMEs) face difficulties in securing investment for growth.

Wilson added, "Improving VGEC is paramount for advancing the UK games industry. By lowering the costs of game development, VGEC encourages more investments and the generation of skilled jobs. Our new findings illustrate that an IGTC could lead to the creation of 7,000 jobs, including 900 development roles, and increase tax incomes for the HM Treasury. Strengthening VGEC will promote economic development and maintain the UK's leading status in game creation."

In an earlier statement, TIGA welcomed the UK Chancellor's spending review, focusing on the uplift in funding for creative industries as a positive step forward.