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.
The ATT had previously expressed concern that the legislation was overly complex and created unnecessary complications within the practical working of the new allowances
Introduced in 2013 to encourage R&D investment, the scheme allows UK businesses to pay only 10% corporation tax on profits derived from any UK or certain EU patents
Yet, KPMG’s annual survey shows that the UK is still an attractive place to do business, despite falling in rankings in tax competitiveness and FDI appeal
MTD cost estimates are not based on 'facts', and are 'disbelieved' by most small businesses and sole traders, says Lords committee chairman