Budget Games: UK To Get Tax Breaks For Game Dev

By Jim Rossignol on March 21st, 2012 at 1:56 pm.

He looks human enough.
The UK government’s man at the money-controls, Chancellor George Osbourne, has announced a tax credit for game development. He said: “The film tax credit, protected in our spending review, helped generate over £1 billion of film production investment in the UK last year alone. Today I am announcing our intention to introduce similar schemes for the video games, animation and high-end TV production industries. Not only will this help stop premium British TV programmes like Birdsong being made abroad, it will also attract top international investors like Disney and HBO to make more of their premium shows in the UK. It will support our brilliant video games and animation industries too.”

The details, of course, will be all important. If this is a tax break for mainstream game development then I fear it will mean little, due to there being just a handful of a big studios left in the UK and existing heavy investment in other countries. If, however, it extends to smaller enterprises, then it could make a real difference. I’ll update when we know a bit more.

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64 Comments »

  1. Lewie Procter says:

    Eh. If it is just for big studios, I’ll be ready to deeply resent my taxes being used to subsidise EA/Activision/Ubisoft all opening big studios here and then sending the profits back home.

    • Unaco says:

      Would you rather they DIDN’T open studios in this country, and opened them somewhere else that does offer tax breaks? And where is the ‘subsidising’ part come in? Tax break doesn’t mean we give them money, it means we take less money from them… and seen as they don’t have studios here just now, and aren’t paying any taxes, giving the breaks, letting them set up and then taking less taxes is surely better than taking no taxes from their currently non-existing studios?

      I’d say the founding of studios, the employment of young people in the games industry, the experience and achievements that can be gained, and the economic boost will make up for whatever we lose in taxes.

      • simoroth says:

        Indeed. The prospect of job creation is always good. Hopefully it will push up working conditions too. (Unlikely, having been around EA Vancouver, that was the poster child for Canada tax breaks, they were still working crazy hours even if the building was sweet.)

        Most importantly though, the bigger a sector we have here, the more free drinks there will be for us at Develop conf.

      • Bloodloss says:

        Do you support lowering income taxes for the same reason? After all, if we lower taxes, it’ll always bring in rich and successful people and thus more money for the country, right?

    • Drinking with Skeletons says:

      It would still encourage them to employ UK citizens, which is significantly better than nothing. If it works out well, then it would open the door for smaller developers to have the benefits extended to them.

      Assuming it doesn’t intend to include those small devs to start with.

      • apocraphyn says:

        I’m looking forward to the possibility of them opening new/expanding current studios in the UK. I’m working for one of the ‘bigger companies’ myself right now, and I’m living abroad as a result. As such, have to put up with a terrible selection of food at supermarkets, have to get plane tickets back home, typically see my British friends once a year, yadda yadda yadda…purely selfish interests, I assure you :D

    • Blackcompany says:

      I have made it my mission to debunk this myth anywhere – and indeed everywhere – I find it. So, here we go:
      .
      Subsidize: To aid through the giving of a Subsidy.
      .
      Subsidy: 1. Monetary assistance granted by a government to a person or group in support of an enterprise regarded as being in the public interest. 2. Financial assistance given by one person or government to another.
      .
      Tax breaks are not a subsidy. Tax breaks do not subsidize anything.
      .
      To subsidize something is to give someone or some organization money in order to assist them in a cause.
      .
      To provide someone a tax break, is to allow them to keep more of their own money, which you never had to give in the first place.
      .
      Ergo, a tax break, is not a subsidy, no matter how badly the American left would like us to believe otherwise.
      .
      That is all. Thank you.

      • Brun says:

        That is very much up for debate I’m afraid. Several EU corporations have argued that tax breaks to American competitors from the U.S. government constitute subsidies. They have even filed successful disputes with the World Trade Organization using that exact argument. I’ve even seen EU companies argue that federal contracts constitute subsidies to US companies that operate in both the federal and commercial markets.

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        Llewyn says:

        First recorded use of subsidy in the OED to mean financial assistance from public bodies dates from 1867. First recorded use of subsidy in the OED to mean aid or assistance in more general terms dates from 1387.

        If you’re going to use a dictionary to justify your political opinions (which are completely alien to a discussion of British government policy on a British gaming website) at least use a proper one.

      • copernicus_phoenix says:

        I’m afraid you’re wrong – that is only a valid description of a ‘subsidy’ if monetary transactions are the only way of measuring financial assistance. This is simply not the case, since non-monetary transactions also have value. One example is with the banking system – the implicit support of the major commercial banks by government guarantee in the UK is worth billions, and yet you would consider it not a subsidy. The likes of HSBC would not be able to borrow at such low rates if they were based in Iceland, with a weaker central bank.

        More prosaicallly, a company operating in the UK has the advantage of government-provided health care (unlike the US for example where employers must directly purchase health care cover), strong enforcement of contract law and the rights of private ownership and for law and order in general (unlike some countries, where the Mafia / organised crime groups must be paid off) and a healthy education system (allowing companies to recruit skilled staff – not many game developers in Mombasa). These benefits have a cost, and by allowing certain companies (but not others) to avoid paying their share of that cost, the government is, in effect, subsidising them.

        • Blackcompany says:

          Can’t give what you never had to begin with. Since when do we call ‘Not getting money from someone’ a subsidy?
          .
          And I don’t care what governmental organizations decided to “call” subsidizing. Since when have they been right about, well, anything else? Why should we begin trusting their definitions now? Especially when they run contradictory to common sense and the laws of math at the same time?
          .
          All I am saying is this: If you have it, and you give it to help someone else achieve a goal, you are “subsidizing” their efforts.
          .
          If you don’t have it, and you don’t get it – and you don’t extort it from someone else for little to no reason – then you simply don’t have it to give in the first place. Which means, of course, that you could not very well have used a thing you did not have to subsidize the creation of another thing you also did not have.
          .
          Definitions – including the one from the dictionary – be damned. “To subsidize” is to give, and you cannot give what you do not have. Only politicians have any interest in leading the public to believe you can subsidize by NOT taking something from someone.
          .
          This said, Copernicus brings up some good points. Such as Government Healthcare and quality education, to name two so-called “Subsidies” “provided” by government for businesses working in the UK.
          .
          Except…except, these aren’t government subsidies, either. If the government provided them free of charge, they would be. But the government doesn’t provide them free of charge.
          .
          See, companies – and more importantly the individuals who work for them – pay taxes. These taxes pay for the education and the healthcare. Ergo, they are not free from the government, and thus, are not subsidies, no matter how badly the government – any government – would like us to believe otherwise.
          .
          The American congress would love for us to believe that our tax breaks are subsidies. The fact is, however, that you are simply letting people keep more of the money you never had to give them.

          • copernicus_phoenix says:

            Except…except, these aren’t government subsidies, either. If the government provided them free of charge, they would be. But the government doesn’t provide them free of charge.

            Nonsensical argument. If the government gave cold hard cash to a company, it wouldn’t be ‘free of charge’ either. Someone has to pay for it in tax contributions, or we all have to pay for it if the printing press is employed.

            See, companies – and more importantly the individuals who work for them – pay taxes. These taxes pay for the education and the healthcare. Ergo, they are not free from the government, and thus, are not subsidies, no matter how badly the government – any government – would like us to believe otherwise.

            The point is that tax cuts which target only companies in a specific sector ensures that they don’t pay the same taxes. There is a valid argument to be had over how much British companies should pay in tax, but to defend a situation in which some companies pay a higher bill so that others can freeload, does not seem particularly principled.

          • Blackcompany says:

            Now that, Copernicus, I will agree with. Every company in a given industry should pay the same in taxes. I could not possibly agree more. Whether a large or a small developer, for instance, the tax breaks should be the same. Granted this gets into the ‘same amount vs. same percentage’ argument, but I thoroughly agree with your assessment: If you are going to provide tax breaks for a company in a given industry, you must provide an equal tax break to every other company in a given industry.
            .
            I completely agree.

          • copernicus_phoenix says:

            Now that, Copernicus, I will agree with. Every company in a given industry should pay the same in taxes. I could not possibly agree more.

            That’s not my point – I am arguing that every company in every industry should pay the same rates of tax*. In effect, I don’t think the game developer should pay less tax than the car manufacturer or the pharmaceutical creator. If game development becomes a privileged, protected, career, then we will simply be encouraging people to remain in less productive industries or to go about their jobs in a less productive way, which will harm our economy in the long run. I wish British developers well, but I think the industry should face the same competitive pressure that every other industry has to.

            * The only exception is if national security reasons are involved – for example, our armed forces should have a local defence industry, and we should not be over dependent on energy supplied by Russia or the Middle East. Game development does not fall into this category.

          • rivalin says:

            “Can’t give what you never had to begin with. Since when do we call ‘Not getting money from someone’ a subsidy?”

            We have the same problem with large segments of the left here in the UK; not taking someone’s money is apparently equivalent to giving them money.

            When wealthy people here get a tax cut, people say that the government is “taking from the poor and giving to the rich” – a statement which is a complete inversion of reality, how can not taking person 1′s money and giving it to person 2 be described as taking from person 2 and giving it to person 1?

            It’s like someone deciding not to mug you and then accusing you of stealing money that was “theirs”, because they would have gotten it if they had mugged you.

            Anyway, to get back on topic; great news for the game industry, hopefully it can be salvaged from the damage wrought by the previous government’s complete lack of action over the loss of talent and investment to other countries.

          • battles_atlas says:

            “It’s like someone deciding not to mug you and then accusing you of stealing money that was “theirs”, because they would have gotten it if they had mugged you.”

            As opposed to what the bankers populating the 50p tax band did, and actually mug you?

            It always amuses me how this argument starts at the point of taxation, not of wealth accumulation. As if there is no questions to be asked there – the wealth of the rich is simply a direct corollary of their magnificence, some Law of Nature (talent * effort = income). Economic reward is of course no such thing, it is decided by the rules society sets, and in neoliberal society like ours those deciding these rules happen to be rich themselves, are bankrolled by even richer people, and supported by even richer media barons. But no, there’s no story to tell there apparently. Just focus on the point where the government takes some of that money that the rich have ‘earned’, and keep the black box closed.

          • battles_atlas says:

            @ blackcompany

            You fail to mention how US corporations use the claimed tax rate on US corps, which I believe happens to be relatively high, as an argument to provide further support to them, ignoring the fact that tax breaks mean that many of them actually pay no tax whatsoever. In 2010 Verizon had a tax bill of minus $703m, off profits of $12bn, and they’re not alone.

            http://www.salon.com/2011/11/03/the_great_corporate_tax_scam/

            The fact that you are almost certainly unaware of this fact may or may not be related to the ownership of the media by the rich i mentioned above.

      • jaypettitt says:

        It’s a subsidy by another name. If we taxed them the going rate of £5 pounds a year, but gave them £1 a year subsidy, then that’s very much the same thing as deciding to tax them a reduced rate of £4 a year.

  2. Premium User Badge

    jezcentral says:

    Even if it’s for the big studios it will be better than than what we had before.

    While Brown spunked our money up the wall, Canada built their industry into a games leviathan which overtook ours and left it for dust.

    EDIT: What I meant by that was Canada now has a load of tax-paying games devs in their country, while we don’t.

    • copernicus_phoenix says:

      Brown did something else though – he closed down a large subsidy for the film industry. The reason was very simple – the most powerful sector of the economy in Britain is the City. The City don’t make great movies, but they do make great tax products. In particular, the City started using the film tax breaks to help the richest members of society to avoid their taxes, including many bankers and Premier League footballers. After trying to plug the loopholes, the scheme was eventually abandoned.

      That’s the problem with targeted tax breaks in Britain – you have to be certain that it won’t enable the parasites to help yet more tax avoiders. Much better to have a lower rate of tax for all.

      • El_Emmental says:

        Yep, or we could fight tax evaders with huge fines, frozen accounts and jailtime, just like we do with other delinquents and criminals.

        Sadly, it also means that anyone with a little bit of money (minus the very few naive do-gooders) will be concerned by these lawful punishments, so they will protest, and will corrupt politicians / judges / tax inspectors, and will obtain a magnificent rollback, claiming “one shouldn’t be punished for his success” – like if being rich enough to get an access to semi-legal tax evasion services was the definition of success in our current society, nah let’s be serious for a minute.

        Better scrap an old loophole before the man on the street learns about it and start screaming “hey ! I want my share of the pie too !”

        In fact, new loopholes are pretty much like unknown bands/unpopular musical genre, soon-to-be-big entertainment service (like video games were in the 90s), or even obscure drugs, that most people didn’t hear about (yet) : the early adopters are pretending they’re smarter than everyone else, that they’re contributing to something great and shouldn’t be punished/booed for that (hey, they’re smarter than everyone else, they know what’s best for the society).
        Then come the “mainstream” tax evaders, ruining everything by getting caught (the fools !) or even bragging about it to their friends, getting media’s attention. These damn noobs, L2TaxEvade RTFM >:(

  3. Unaco says:

    Woohoo! Good stuff!

    Even if it is for mainstream game development, the better tax deal may encourage studios to set up here… after they all fled due to Labour’s refusal to even recognise them (except for when Keith Vaz wanted something to blame for corrupting our youth). Combine this with things like the Raspberry Pi, the move away from IT towards Comp Science in schools, and the general push for programming in education, and we might see the UK grow into a powerhouse of Vidya Game development.

    • mickygor says:

      Yea, I’m excited about what this government is doing for the computing industry too. Coupled with the entrepreneurs such as those behind the Raspberry Pi, and the sustained growth of ARM, we might well finally be headed to the top of the world stage where we belong.

    • Milky1985 says:

      Well they labour did say about 6 months before the election that they were going to do somethign like this, then it got scrapped when the new government turned up :P

      • Premium User Badge

        jezcentral says:

        Yes, they’d been saying that for years and not even TIGRA believed them, by then. No government was going to give them tax-breaks whoever won the election, as we had no money.

  4. Flukie says:

    Bet Rockstar North are happy.

  5. The First Door says:

    This is possibly very good news! As Jim said though, will have to wait for the details until I am convinced. After all, wasn’t a tax break promised a couple of years ago?

  6. Dana says:

    Big studios moving to Europe can only mean good thing ?

  7. fauxC says:

    Hooray! Money being taken from the poor and the disabled to fund big video game studios! We live in enlightened times indeed.

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      corbain says:

      Possibly the most uninformed comment I’ve ever read on RPS

    • Blackcompany says:

      I would ask how you reached this conclusion, but I doubt I would understand even if you explained it.

    • skinlo says:

      Do you even know what a tax break is?

      • fauxC says:

        Ok so the game devs are going to pay less taxes, this means that money which should have been going to the state (for example, to pay for JSA or the NHS or Disability Living Allowance), is instead staying with the devs.

        It’s an oversimplification, but compared to the absolute nonsense this government spews out of every orifice, it’s nobel prize winning economics.

      • Premium User Badge

        AlwaysRight says:

        This thread is why I love RPS. Down with idiots!

  8. Bhazor says:

    “HBO to make their shows here”

    The Wire will return and now be set in Kent. Totally calling it.

    • Unaco says:

      Someone in Govt. is a fan of Game of Thrones, and wants them to do some filming in the UK, so they can volunteer as an extra.

      • Premium User Badge

        Skeletor68 says:

        They’re already filming in Belfast, no?

        • Unaco says:

          So they are… At the Paint Hall studios and a couple other locations. For some reason I thought they were doing all of the filming in the Republic of Ireland, and not Northern Ireland, for tax reasons (i.e. RoI offered some tax breaks, NI/UK didn’t). Oh well, maybe they’re fans and want them to keep filming in the UK, maybe do some in Wales/England/Scotland. Fairly sure they dropped Malta as a filming location between Season 1 and Season 2… wouldn’t want them to ditch the UK.

        • Premium User Badge

          corbain says:

          Parts of series 2 also were shot in Iceland

  9. westyfield says:

    Yay, I can play more Batman games to take my mind off the pain, cold, and hunger!

    Cheers George!

  10. Milky1985 says:

    So they have finally decided to do the thing decieded 2 years ago by the previous government, that the current government scrapped when they came into power!

    Well done government, hopefully its not too little too late :P

    • KikiJiki says:

      No, they decided to enact the thing suggested 2 years ago by the previous government that was clutching at straws to get support from anyone and everyone. The thing that they couldn’t afford to do anyway at that time and so shelved until this budget.

  11. wodin says:

    Hate him. Hate the present Government with a vengeance. If I typed what i would like to do or happen I’d get about a 7 year prison sentence.

    Birdsong was set in France for starters, it was also one of the best dramas I’ve seen on telly for years and years if not ever. book is superb aswell.

  12. wodin says:

    One last thing don’t be surprised it’s only big developers with millions already. Blimey Tories are all about protecting the rich and middle classes and shiting on those less fortunate.

  13. Chris D says:

    Feels like an abusive husband sending you flowers to try to make up for last night’s beating.

  14. buzzmong says:

    Ah, so we’re trading off the NHS for more games?

    I’m honestly not sure if that’s good or bad.

    • Grayvern says:

      It’s not as if the Labour party didn’t start us down both paths, not that I hate the Torys any less, elections are like choosing between Hannibal Lecter and William Gull.

      Parliament, well I say we take off…

      • LionsPhil says:

        I particularly like how this time we chose the third option to the extent where they got to play kingmaker, and then the spineless bastards basically gave us all-tories-all-the-time anyway.

        Tax cuts for the rich and privatizing the roads. Outstanding. Just outstanding.

  15. Groove says:

    God bless you Staring Eyes tag, it’s like you read my mind.

  16. realmenhuntinpacks says:

    Brilliant. Now stop fucking the NHS. This is clearly a good thing for my hobby, but it’s not going to stop me fantasising about Gideon being dragged into the street by angry nurses and pelted with colostomy bags.

    • MiniMatt says:

      Funnily enough, that has given me an excellent idea for a game.

      (though naturally I’ll have to set the price point to ensure none of those working plebs can play it, millionaires only please)

  17. Grayvern says:

    On a serious note thought it’s not as If this will be in any way a major part of any budget, a couple million here and there is nothing compared to 500-700 billion.

    The NHS isn’t being screwed for money it’s being screwed for bullshit ideological reasons.

    They try to come up with monetary reasons but it basically just boils down to we actively ignore any and every expert report we have ever commissioned and we really like the idea of big business. This applies near universal to Tory and Labour high ups, or maybe it’s just the civil service.

  18. Demiath says:

    Meh, short-sighted corporate welfare of this kind is not the kind of capitalism I signed up for. Competing with quality of education, favorable working conditions which attract great creative people and the excellence of design which is the natural combined result of such factors is the only long-term solution for widespread industry growth.

  19. Roxton says:

    This is a Good Thing. We’ll find out exactly how Good of a Thing it is when we have more details.

    Just because someone you don’t like implements a policy, it doesn’t make that policy automatically bad. The Coalition has made plenty of decisions that I disagree with, but that doesn’t mean that I can’t agree with this one.

  20. Terraval says:

    Of course we need to wait until more details emerge but it sounds like a step in the right direction.

    Surprised nobody’s brought this up yet but to all the naysayers please check out Consolevania’s excellent “Games Industry Fluff Piece”, available for free to download on iTunes amongst other places. They interviewed a bunch of Scottish dev teams and they were all clamouring for something like this to happen.