A trade organization urges the implementation of more substantial tax incentives to bolster the "disadvantaged" sectors within the UK industry
The organization TIGA is advocating for enhanced tax incentives to bolster the gaming sector in the United Kingdom. A recent report by TIGA proposes a tax credit of 53% for video game projects costing up to $32 million (£23.5 million), aimed at enabling smaller gaming studios to expand and thrive.
This report underscores the significant economic impact of the gaming industry in the UK, arguing for the need to enhance the Video Games Expenditure Credit (VGEC). The study, directed by Professors Homagni Choudhury, Joe Cox, and Dr. Alan Leonard from the University of Portsmouth, warns that without reform, the UK gaming industry could lose its competitive edge internationally. The document notes that the increased tax revenue generated would surpass the initial investment by HMRC.
The analysis highlights the sector's importance to the UK economy, supporting over 73,000 jobs and stimulating regional development, although it faces challenges in attracting foreign investment. The report points out that other countries offer more favorable tax benefits for game production. For instance, the UK's VGEC offers a 20.4% relief, whereas France and Australia provide 30%, and Quebec offers 31.9%. Moreover, 78% of UK studios have four or fewer employees, making it difficult for small and medium enterprises to secure funding due to their limited financial history and unpredictable success rates.
To tackle these hurdles, TIGA suggests the UK government introduce a separate games tax credit with a 53% rate on 80% of eligible expenses for projects up to £23.5 million. This initiative is projected to enhance the Gross Value Added (GVA) by £482 million and create nearly 7,000 jobs.
Dr. Richard Wilson OBE, CEO of TIGA, emphasized, "Our video game industry offers high-skilled jobs, boosts regional economies, and focuses on exports. However, the current VGEC falls short compared to international incentives, thereby affecting our ability to attract investment. Many small studios also find it hard to grow due to a lack of funding."
Wilson added, "Enhancing VGEC is key to driving growth in the UK gaming industry. It reduces development costs, boosts investment, and spurs high-skilled job creation. According to our report, establishing an independent games tax credit could generate 7,000 jobs, including 900 in development, while also contributing to the Treasury. Improving VGEC will foster economic growth and help maintain the UK's leadership in game development."
Earlier, TIGA commended the UK Chancellor's spending review, which promised more funding for creative industries, as a positive step forward.