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TIGA: No UK Tax Relief May Lead To 24% Headcount Decline Through 2015

TIGA: No UK Tax Relief May Lead To 24% Headcount Decline Through 2015

January 26, 2011 | By Kris Graft

January 26, 2011 | By Kris Graft
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More: Console/PC

UK video game industry trade group TIGA said it submitted an 85-page document to the UK government that includes new evidence in support of tax relief for the sector.

The document submission comes about seven months after the UK government scrapped game developer tax breaks despite previously-stated commitments.

In the new submission, TIGA argued that games tax relief would create over 1,300 new studio jobs and increase game studio investment by £138 millon ($218.8 million). About 2,400 indirect jobs would also be created with more government support, the group claimed.

"The UK videogames industry is an industry of the future -- high tech, highly skilled and export oriented," said TIGA CEO Richard Wilson in a statement.

"If the Coalition Government is serious about its intention of rebalancing the economy then it should invest in the UK video games industry by introducing a tax break for games production," he added.

TIGA said the video game industry's headcount has already fallen by 9 percent since 2008. Without tax breaks, the headcount will fall an additional 24 percent between 2010 and 2015.

The group also said the UK game industry's direct and indirect contribution in tax revenues fell by a total of £55 million ($87.2 million) between 2008 and 2010, and the sector’s contribution to gross domestic product declined by £132 million ($209.3 million).

Declines in the UK game industry come as other countries such as the U.S. and Canada have offered increasing tax breaks to game makers in the past two years, leading to an exodus of UK development talent to other countries.

TIGA forecast that tax breaks could save over 2,000 UK game development jobs and 3,700 indirect jobs over the next five years, as well as hundreds of millions of pounds in development expenditure, tax revenues and GDP contributions. "Games tax relief more than pays for itself," the group argued.

The proposed tax relief would include any game development businesses that fall "within the scope of UK corporation tax that develop a game with a budget of at least £100,000 ($158.5 million) and which pass a cultural test." The relief would be calculated in a way similar to the relief that the UK film industry currently enjoys.

TIGA chairman and CEO Jason Kingsley, who is also creative director at UK developer Rebellion, said, "The global video games market is expected to grow from $52.5 billion in 2009 to $86.8 billion in 2014. However this growth will happen overseas if we do not invest today."

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