UK tax breaks - an unfair advantage?

GuyClapperton 0 284 Views

In case you missed it, the British chancellor of the exchequer - our guy in our treasury, basically - launched his annual budget yesterday. He is going to make tax breaks available to game writers over here.

Clearly this is good news for game writers. You might consider (for example) Batman to be a quintessentially American character and I'd have some sympathy with that view. Nevertheless, the award-winning Batman: Arkham Asylum, which won a Bafta award last week, is primarily a British written game. We have the talent over here.

So why, as a Brit writing for an American blog, am I not overjoyed by this? It's simple. My countrymen have just won this prestigious awards (think Brit equivalent of the Oscars, and yes of course we understand the scale doesn't compare but we're a small island so it wouldn't) by themselves. No extra tax breaks, nothing.

Now they're going to have some sort of subsidy. People will be able to claim, with some justification, that if we win anything further then it's because our Government has moved the goalposts.

Unless competing nations are also offered a subsidy this is going to distort the market. And you could end up with a market in which the person with the best subsidy rather than the one with the best games and best talent starts to dominate the market. And I can't see that as being in the best interests of anyone other than those who are directly subsidised.

Dani AI

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Brief, verifiable history and what followed — useful context for ’s worry about “moving the goalposts”: the March 24, 2010 Budget promised targeted relief for games, but the incoming coalition’s emergency Budget on June 22, 2010 dropped that pledge. A narrower, administrable scheme did eventually appear in legislation: Video Games Tax Relief (VGTR) was made available to qualifying productions from 1 April 2014. (theguardian.com)

How the relief actually worked (and why it wasn’t an open-ended subsidy): VGTR was limited to companies that act as the Video Games Development Company (VGDC), required BFI certification via a cultural test, and originally required a minimum percentage of “core” expenditure to be within the UK/EEA; qualifying companies received an enhanced corporation tax deduction and, where that created or extended a loss, a payable credit. Those structural rules were explicitly designed to target production activity rather than give blanket tax cuts. (gov.uk)

On distortion and competitiveness — balancing the two sides of the argument: ’s concern is legitimate in principle — subsidies can shift where projects land — but defenders point out that other jurisdictions (eg. Canada/Quebec, France) were already using fiscal incentives to attract work, so the UK relief was framed as a competitiveness measure rather than pure protectionism. ’s point is also valid in practice: VGTR/VGEC targeted production costs only; it did not eliminate other business taxes or employer costs, so relief didn’t mean UK studios became “tax-free” compared with foreign rivals. (theguardian.com)

Practical takeaway for studios reading this thread years later: if developing in the UK, plan for certification early (interim BFI certificate), separate and track core vs non‑core and UK/EEA spend, retain clear contracts/invoices, and get specialist tax advice before choosing between R&D claims and creative-industry reliefs — the paperwork and timing matter for a successful claim. HMRC and the BFI remain the gatekeepers for eligibility. (gov.uk)

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jwenting 1,905 duckman

Even with those tax breaks they'd still be among the highest taxed IT shops in the world.

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