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UK Now Offering Games Development Tax Relief

By Amanda Banks,, London

20 August 2014

The UK has introduced Games Tax Relief of up to 25 percent on the production costs of culturally British video games, after the government's cultural regulations came into force on August 19, 2014.

To qualify, games must pass a point-based test based on cultural content, cultural contribution, development location, and the nationalities of key personnel working on the project. The GTR can be used against qualifying expenditure incurred since April 1, 2014.

The move has been praised by trade bodies UK Interactive Entertainment (UKIE) and The Independent Games Developers Association (TIGA). Richard Wilson, the CEO of TIGA, said that the relief is expected to create and protect 10,300 direct and indirect jobs over the next five years, as well as secure approximately GBP450m (USD749m) in investment.

Meanwhile, Jo Twist, the CEO of UKIE, described GTR as "the most innovative, inclusive, and future-proof games tax relief scheme in the world." She added: "We worked very closely with government to make sure this scheme benefits every type and size of developer, and that it recognizes the importance of post-release production in games."

Ed Vaizey, the Minister for Culture and the Digital Economy, said that the tax reliefs "are pivotal in ensuring we can compete on a global stage." According to the Government, 95 percent of UK video games developers are SMEs. The Government estimates that the new relief will provide about GBP35m of support each year to the sector.

In March, the European Commission concluded that GTR is in line with European Union state aid rules, following an investigation into the proposals. The Commission agreed that the support is needed to prevent the industry's decline, and found that the measure promotes culture without unduly distorting competition in the Single Market.

TAGS: tax | investment | European Commission | tax incentives | corporation tax | United Kingdom | cultural heritage | tax breaks | Europe | Economy | Tax

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