FIGURES FROM Dundee’s gaming sector have welcomed the first sight of a new law designed to introduce tax breaks for the industry.
The legislation, which was revealed in draft form by the UK Government earlier this week, will cut the tax paid on “qualifying expenditure” by video games firms by 25%.
Industry leaders have welcomed the proposals, saying the absence of a minimum spend threshold would enable smaller studios and start-ups to take full advantage.
Richard Wilson, chief executive of trade association Tiga, said the proposed measures were “excellent news” for the video games industry.
“The Government has listened to our proposals and adopted the vast majority of our suggestions for the design of Games Tax Relief,” he said.
“Tiga is particularly pleased that there is no minimum spend threshold: this will enable start-up studios and small development businesses with smaller budget games to benefit from Games Tax Relief.
“Additionally, it is excellent that the government has agreed to allow post-release development expenditure including quality assurance costs to be eligible for Games Tax Relief.
“One of Tiga’s key priorities has been to ensure that the new Games Tax Relief supports the ‘games as a service’ business model. The Government agrees.”
The tax measures will be based on existing arrangements already in place for the film industry.
Games featuring in-game adverts will be included in the provisions, as will post-release development expenditure. Service-based apps will also qualify.
To qualify, titles will be required to pass a “cultural test” which assesses the extent of the work carried out in the UK, and the “promotion, development or enhancement” of British culture.
Under the plan other tests will include the setting of the game, and the provenance of the lead characters and story.
Mark Ettle, from Dundee studio Cobra Mobile, which is responsible for the iBomber titles, said the measures were long overdue but would be welcomed locally.
“After years and years of campaigning and the loss of thousands of UK jobs the government has finally realised that there’s a games industry in the UK,” he said.
But Kristian Francis of Abertay University breakout firm Swallowtail, student developers of the award-winning Tick Tock Toys, warned the tax reliefs would only help established companies with a settled income stream.
“It’s great that this has been set up and particularly the part which says there will be no minimum spend,” said the young company director.
“But in our situation we’re working on our game, we’ve had help from Abertay University’s prototype fund but at the end of the day if the game doesn’t take off or if we can’t get extra investment or work then a tax break won’t help.
“The more established companies around Dundee could benefit greatly from that but they have already got their businesses up and running.”
The measures are included in the Finance Bill 2013, which is to be debated by parliament next year.
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