Jeremy Holt, Founder, Swindon Museum of Computing & Justin Tomlinson MP
Justin Tomlinson MP, Member of the All Party Computer and Video Games Group, has signed a joint letter to the Chancellor from the Group, calling for focused tax relief for the UK video games industry. A tax relief would provide a powerful boost to the UK video games industry and so support the wider economic recovery.
The UK video games development sector is an industry of the future. Video game development is the archetypal knowledge-intensive sector. 72 per cent of a typical development studio’s workforce is qualified to degree level. The industry is a high technology sector, with studios often spending around 20 per cent of their turnover on research and development. The industry is export oriented, with 95 per cent of UK developers exporting at least some of their games. The UK boasts a highly qualified talent pool and an ability to create new IP in video games that can sell all over the world. The UK video games sector has considerable promise. The global games industry has grown by 23 per cent through the global financial turmoil and is projected to grow by 8.2 per cent each year to 2015.
To maintain its status as a world-class games development location, to continue to maximise tax revenues and to attract investment into the UK, the UK Coalition Government needs to implement a relatively modest but significant fiscal intervention, a tax relief for games development. A Games Tax Relief will:
• Improve access to finance for independent studios.
• Greatly improve the UK’s chances of retaining and attracting studios owned by global publishers.
• Allow larger companies to grow and retain experienced talent that struggles to stay in the UK in the absence of such assistance.
• Significantly expand the venture capital market for games companies (just as the film tax credit), which will largely benefit British-owned companies.
Over 5 years, Games Tax Relief would generate and safeguard: over 4,660 jobs (equivalent to around half of the existing workforce in the games development sector); £188 million in investment expenditure by studios; increase the games development sector’s contribution to UK GDP by £283 million; generate £172 million in new and protected tax receipts to HM Treasury, and could cost just £96 million over five years. Games Tax Relief would more than pay for itself. It would also enable UK developers to compete on a more even playing field against government backed developers in other countries: the Governments of our principal competitors in Canada, France, Singapore and the USA all receive national or regional/state tax breaks for games production. Studios in receipt of public support in Canada receive assistance equivalent on average to 23 per cent of their turnover. This puts UK games studios at a real disadvantage.
The success of the film tax credit demonstrates what can be achieved. The film tax relief scheme promotes the production of culturally British films and in 2009/10 provided around £95 million of support to the British film industry, supporting over £1 billion of investment in 208 films.
Justin Tomlinson MP said “The UK is a global leader in creative talent in the technology industries, including Video Game development. It is vital that the tax system enables us to retain our competitive edge so that we continue to excel in this fast moving industry. These are the growth sectors that will help build us a strong economy, we must do all we can to help them grow, employ and compete.”