Tax relief for the video games industry in the United Kingdom has been delayed because the European Commission was not able to approve the Cultural Test provisions of the plan, according to this GamesIndustry International report. The Cultural Test requires those applying for tax credits to promote the culture of the UK in various ways.
UK games industry trade groups UKIE and TIGA expressed their disappointment in the news, but were optimistic that the government would continue to be committed to tax breaks for games developers.
"We were prepared for this as it was always a possibility when establishing an entirely new European tax scheme, especially as games are so different to film and TV," commented Jo Twist, CEO of UKIE. "We are confident of the government's commitment to implementing the tax breaks as soon as possible. But we hope that the delay will be a short one and shall now be doing everything that we can, working with UK government, the European Commission and TIGA, to get the state aid approval that we need as soon as possible. They absolutely will still happen."
The delay in implementing the tax relief plan was revealed as part of the UK budget today. The good news is that an additional £10 million will be made available to the creative industries over the next two years, putting the funding available to £16 million. It was also announced that corporate tax would be reduced to 20 percent in 2015, R&D tax relief would be increased, and employment allowance worth up to £ 2,000 for businesses would be introduced.
"Although Games Tax Relief has not yet received State Aid clearance from the EU Commission, TIGA has been assured that the UK Government is committed to this Relief, will be legislating for this Relief in the Finance Bill and will deliver this Relief," Dr Richard Wilson, TIGA CEO, said. "Games Tax Relief is vitally important because its introduction will enable the UK to compete on a level playing field against our overseas competitors who already have tax breaks. Games Tax Relief will also power investment and job creation and address the market failure in the under-production of culturally British video games."
“TIGA stands ready to work with the UK Government and EU Commission to accelerate the introduction of Games Tax Relief. Businesses need to see the measure introduced as soon as possible to aid commercial planning."
"The increase in the budget for the Skills Investment Fund and the new digital competition will strengthen the competitiveness of the UK games industry. Together with Games Tax Relief they make a helpful hat trick of policy measures."