UK entertainment technology sector in line for 'generous' tax breaks

Expected 20-25 per cent relief comparable to Canada, US and France says TIGA CEO

Following the government's promise in its 2012 Budget to introduce special tax relief measures for the animation, high-end TV and video games industries, the Treasury has now released a consultation document that suggests the sector can expect "a powerful stimulus".

The document states an intention to make UK tax breaks "among the most generous" in the world.

Based on the UK's existing Film Tax Relief (FTR), the breaks have been applauded by CEO of video games trade association TIGA, Dr Richard Wilson, who is "delighted". TIGA has campaigned for these measures for four years.

"There is a god – he's answered our prayers," Wilson told Computing.

"From a practical point of view, animation, high-end TV and video games companies will have an advantage in tracking their investment and making a profit," said Wilson.

"And by making that statement, [the government is] recognising Canada in particular, but also United States, France, Singapore and other countries, which have been at an advantage in recent years."

Wilson continued: "The government seems to be indicating that it's going for some version of the FTR. It doesn't specify precisely what they are, but they're probably in the region of 20-25 per cent, we imagine, which is pretty competitive, comparable to rates of relief in the United states and Canada.

"The good thing is, of course, we now have cross-party support for this," added Wilson. "Conservatives, Lib Dems, Labour Party, Scotttish National Party all back this."

Wilson said the proposed breaks will "provide a powerful stimulus for the UK video games sector," but added that it's now important for companies to work with the government, via the consultation, to "ensure that the tax relief supports new business models, and is practical to access and to administer".

Deloitte tax director Rachel Austin added: "Given the long lead time for productions in these sectors, companies need to know the value of the proposed reliefs as soon as possible to start building it into their planning processes."

Austin continued: "If the government sets the rate of relief at the right level, the proposals will increase the UK's competitiveness in these sectors, encouraging additional investment in the UK and discouraging UK companies from producing culturally British content in countries that already offer incentives."