Videogame industry calls for tax breaks

Britain's economy may have escaped a double-dip recession but the videogame industry is calling on the Coalition government to do more to spark growth.

The economy formally grew by 0.5 per cent in the first quarter of 2011 following an unexpected drop of 0.5 per cent in the final quarter of 2010.

Analysts say it points to the UK's underlying recovery being fragile at best and today the videogame industry trade body, TIGA, has seized the chance to make a fresh call for tax breaks saying such a move would stimulate economic growth.

According to TIGA CEO Dr Richard Wilson, the UK games industry's workforce declined by nine per cent between 2008 and 2010 at a time when global software sales grew by 16 per cent.

He believes tax breaks given to games developers in country's such as Canada have led to an uneven playing field and that the UK videogames industry is at a competitive disadvantage.

Figures show, he adds, that 76 per cent of investment in the UK games industry comes from overseas publishers.

“TIGA’s Games Tax Relief, a sector specific tax break for games production, would encourage inward investment, stimulate economic growth, create thousands of highly skilled jobs and raise hundreds of millions of pounds in tax receipts for HM Treasury,” he said.

The games industry contributes £1bn annually to UK GDP but there have been some casualties over the past year. Realtime Worlds in Dundee closed in September 2010 which Bizarre Creations shut its doors earlier this year.

The Office of National Statistics believes much of the 0.5 per cent increase was an "arithmetic" effect signalling that the economy has recovered from the extremely cold weather last December, which helped push the economy down by 0.5 per cent.

Jason Kingsley, the creative director of games developer Rebellion and TIGA chairman, praised the Coalition government for raising the level of R&D tax credits from 175 per cent to 200 per cent in last month's Budget but called on ministers to allow games businesses to include rents and rates, IP protection and design costs in R&D Tax Relief claims.