UK video games tax relief approved by Europe

by Calum Fuller

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28 Mar 2014

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TAX RELIEFS similar to those afforded to the film industry are to be granted to the production of video games.

The European Commission conducted an investigation into a proposed 25% tax relief on a maximum of 80% of the production budget of a qualifying game announced as part of the chancellor's Budget in March last year.

There are currently around 500 games development studios in the UK, employing around 9000 staff. In 2013, sales of video games in the UK totalled £2.19bn.

The commission initially raised concerns that limiting expenditure for tax reliefs to goods and services used or consumed in the UK could be discriminatory, and the possibility that reliefs of this kind could fuel a "subsidy race" between member states.

It also queried whether the proposed criterion that the games be ‘culturally British' could lead to undue distortions in the market.

Following the commission's approval, the chancellor said: "This is a key industry of the future and I want Britain to be one of its biggest centres. 95% of UK video games companies in the UK are SMEs. This relief is one of the most generous in the world and will help them to grow, creating new jobs for hardworking people."

The relief will come into effect from 1 April 2014, and it is estimated the relief will provide around £35m of support a year to the sector.

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