The UK games industry will not be given any tax breaks under the new coalition government. This contradicts a direct pledge prior to the elections. The Chancellor George Osbourne explained the decision in his budget speech at Westminster and simply said that “planned tax relief for the videogames industry will be cancelled”.
It was the Conservative party that had initially supported the tax breaks and espoused the virtues of the games industry in the UK. They had talked of wanting to elevate it to the same level as the film industry.
“The years of debt and spending made this unavoidable,” said Osborne. The move is predicted to save 40million pounds a year, rising to 50million a year after 2013.
Naturally the UK videogames trade body ELSPA has reacted badly to the news, with their Director General Michael Rawlinson making the following statement:
“Bearing in mind the pre-election commitment towards tax breaks made by the Conservatives and the Liberal Democrats, we are extremely disappointed by the outcome of today’s Budget. Our industry will be rightly puzzled as to how tax breaks can be lauded before an election, only to be seen as ‘poorly targeted’ and scrapped just six weeks later.
We understand that this decision has been made in the context of the current economic climate, yet the Chancellor today spoke of the need for a more balanced economy. If this is to be attained, the government must acknowledge that the creative industries are of vital importance. Therefore in the absence of tax breaks it is the essential that the government work with our industry to ensure that the policies which we have outlined – such as addressing the skills gap and better access to R&D initiatives – are implemented.”
The UK Developer Association TIGA reacted even more angrily. Their CEO said to GamesIndustry.biz:
“The Coalition Government has broken pre-election pledges made by the Conservative Party and by the Liberal Democrats to support and introduce Games Tax Relief. Unless the Coalition Government introduces Games Tax Relief or a similar fiscal measure then the UK will forfeit millions of pounds in inward investment, jobs will be lost and we will cease to be a leading developer of videogames. The UK videogames industry is export oriented, high tech, highly skilled and low carbon in output. This is an industry of the future which the Government should be supporting with action, not words.”