UK government cancels gaming tax break plans

Chancellor George Osborne announces cancellation of "poorly targeted" games tax relief initiative announced in Labour's final budget; opposition brands it "a sad day for gamers."

Previously announced tax breaks for video game developers will not be introduced after all, the British government confirmed today. In his first budget as Chancellor, George Osborne said the proposed games tax relief was "poorly targeted."

This goes against pre-election pledges from the Tory party, most notably statements made by current Minister for Culture, Communications and Creative Industries Ed Vaizey. After tax breaks were missing from the main Conservative manifesto, he assured developers that follow-up proposals would "include details for our support for video game tax breaks." He also said that tax relief for developers was "going to be our party policy." He did, however, clarify his statements by suggesting that the proposed tax breaks themselves might be "too narrow" and suggested that other avenues could also be explored to provide support for the industry.

Talking to GameSpot UK, Labour MP for West Bromwich East and longtime industry defender Tom Watson said, "The Conservatives gave a solemn promise during the election that they would honour the commitment to video games tax relief. They have broken that promise. There is little that the industry can now do to stem the exodus of UK developers to our competitor nations like Canada."

UK game development trade body Tiga condemned the Coalition Government for not including gaming tax relief in the budget, saying it had gone back on pre-election promises. Tiga CEO Richard Wilson didn't mince words as to what he believes the move's effects will be, saying, "Jobs will be lost and we will cease to be a leading developer of video games."

Wilson did admit that the reduction in corporation tax would offer some assistance to game developers but said it did not address the sector's "specific needs." The fight for games tax relief would continue, he said, "To ensure that the UK is the best place in the world in which to do games business."

ELSPA, the UK trade body representing video game publishers, echoed those sentiments saying, "Bearing in mind the pre-election commitment towards tax breaks made by the Conservatives and the Liberal Democrats we are extremely disappointed by the outcome of today's budget."

However, ELSPA went on to say that, "in the absence of tax breaks, it is the essential that the government work with our industry to ensure that the policies, which we have outlined--such as addressing the skills gap and better access to R&D initiatives--are implemented."

Announcing the budget, Osborne also revealed that the standard rate of VAT--UK sales tax--was to rise to 20 percent from the current 17.5 percent from January of next year. If this is reflected in the price paid for games at the till, this would represent a rise of approximately a pound on a standard-price console game.

Responding to industry criticism, Vaizey said, "I am disappointed that we were unable to go ahead with a tax break for video games." He said that the coalition government remained "absolutely committed to supporting the video games industry, which offers so much to this country," and that he would "set out some ideas and proposals next month" on how best the government could support the games industry.

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Discussion

179 comments
IWKYB
IWKYB

Good the UK has been taxing their citizen's to death for quite a while they need a revolution...

LoserMike
LoserMike

That makes sense. Since most devs in the UK are from the UK. Devs rarely move around unlike other tech jobs where everybody concentrates on Silicon Valley.

SporkFireXPS
SporkFireXPS

@funk_189 I wasn't trying to argue, I was just pointing out that RDR wasn't developed in the UK.

funk_189
funk_189

@SporkFireXPS Well now you're just picking. I was just trying to prove that many important games are made in the UK. Sure there are more made in the US and also many made in Europe, Japan and the rest of the world. I was simply replying to comments saying that there were no important games made in the UK.

SporkFireXPS
SporkFireXPS

@funk_189 Well you could say Rockstar San Diego had a role in the development of Grand Theft Auto 4 because they created the game engine used in both GTA4 and RDR.

collingtonuk
collingtonuk

@GamerLegend10 We were in massive debt before the bank bail-outs, we were in rescission longer than almost any other developed country. Tax breaks are a slow burn solution, the money spent on them takes years to recover, even if in the long run it makes a 'profit' we need that money now to reduce the deficit because that is getting bigger and bigger by the day. However its painted this economic situation is labours fault and responsibility. We can out of the boom in debt still, their borrowing and spending were ridiculous and wasteful, so when the bust hit we were in a terrible position.

GamerLegend10
GamerLegend10

@ collingtonuk And the tories are making a lot of stupid cuts all over the place (that will be worse of for the economy in the long run), as well as contradicting themselves on many occasions. these are a few examples: - Obviously canceling the gaming tax breaks. - labour invested in children, by giving £200 to every new born child, which would turn into aprox £9000 by the time they were 18, which would not only help them (giving them money towards driving licenses, further education, houses etc.) in many ways but would also help out the economy. But the Tories have now stopped this - Is going to cut military spending (even though they complained to labour about lack of soldiers equipment, which Tories are now going to make it worse) - Cut police spending

GamerLegend10
GamerLegend10

@ collingtonuk "If our AAA status is lost it will cost us more to borrow, we MUST get the debt down. So things like tax breaks for the games industry have to go." Yeah which is why we need to sort out our economy, but by canceling tax breaks for big industry's (that would bring a lot of money into the country) they will only cause more problems and our economy will just get worse again. "play the fun game of wondering what labour managed to blow all that money on over the years." as i said a lot of our debt is form bailing out the banks (huge amounts of money) but that had to be done otherwise we would be in a lot worse of a situation. Also let me remind u that the economy is recovering (and that is thanks to labour, whether u like it or not). "So things like tax breaks for the games industry have to go" I repeat, these tax breaks will bring more positives than negatives, and will help our economy more than the bit of money from canceling them will be.

collingtonuk
collingtonuk

@GamerLegend10 What are you talking about? your 10 billion was because the pound was so weak, not their economics, though it was their actions that devalued the pound. In a year or so just the interest on labours debt, not the debt itself just the interest will be more than we spend on schools and hospitals. Can you even comprehend how screwed we are if we don't get the debt itself down. If our AAA status is lost it will cost us more to borrow, we MUST get the debt down. So things like tax breaks for the games industry have to go. And while your bleating about it play the fun game of wondering what labour managed to blow all that money on over the years. They were economic morons.

GamerLegend10
GamerLegend10

@ fritigoerd er no, that surveillance catches a lot of crinimals and is well worth having (also stops crimes, because people fear of being filmed and caught doing the crime).

GamerLegend10
GamerLegend10

@ Chickenesta Well actually before labour left we were spending £10bil less than predicted, and our economy was starting to recover. Also most of the borrowing was to bail out the banks, which was needed or we would be seriously screwed right now. Anyway fixing the economy should be there main priority (which this tax break would do), not saving a bit of money which will barely help us. The tax break would have been far more helpful for our country than the little bit of money they will save from not doing it.

collingtonuk
collingtonuk

That's Labour for you, they have economically ruined the country before and if people vote for them they will do it again. After all these years of economic mismanagement the country is utterly, utterly broke. Schools and hospitals are more important than tax breaks for the game industry. Don't blame the current government, blame the morons that blew all our money. Thank god they were booted out.

GamerLegend10
GamerLegend10

@ alexLmx6 if finances are better. When Labour left power the economy was recovering and things were starting to get better again, but know the Tories are making all kinds of stupid decisions (many of which opposite to what they said before they were elected) that will end up damaging our economy and keeping our country in a worse of state than it should be.

Chickenesta
Chickenesta

@quagmireisgod Milk us dry? they've got to correct a 160 BILLION pound defecit, do you know what they means? it means we're spending 160 bil a year more than the government gets in... its unsustainable, everyone knew it was coming so dont try and pretend you saw something others didnt.

quagmireisgod
quagmireisgod

I said it when everybody was cheering them into office....... THEY WILL MILK US DRY!!!!!!!!

steve4123456789
steve4123456789

Great just because they dont give too shts about games, or have even played one, and acked like they know everything there is to it, means we have to survor well we continue to pay tax, so the MP can spend it on there nice houses.

fritigoerd
fritigoerd

Yet it seem british government thinks that having Big Brother Surveillance is worth while .... by this I mean many governments in the world spend their budget on a lot of useless things that has no real benefit for anyone..... but as luck have it we the people end up paying those silly things with our money , thus all the taxes that people have to pay.... a sad day in gaming in the UK .... not that my country (Mexico) is any better , its just sad to see first world countries pulling the same s**t as my own country does ..... sad.... very sad....

funk_189
funk_189

@SporkFireXPS actually whilst San Diego get the credit, it was a two studio job with Rockstar North taking an overseer type role. But you could say it was San Diego's game yes.

Zerosumgame
Zerosumgame

The only game uk is capable of producing is Little Big Planet, no wonder the gov quit. It makes sense. Tyvm.

athenian29
athenian29

Meh. I doubt that the industry really needed the breaks - we're doing fine already. Keep the tax money, and put it towards something useful like infrastructure improvements instead. Games are fun, but you need to prioritize.

alexLmx6
alexLmx6

gotta spend that money running all yer cameras i guess... too bad, hopefully they will take another look at this a few years down the road when finances are a bit better

canaries1
canaries1

You can say that video games should be looked at in a wider spectrum, but what would people say if this happened to theater, film or the wider arts? No this is, yet again, a result of games' wider image problem in the UK media. Video gaming is a form of entertainment that is just as popular and as artistically creative (Heavy Rain, Little Big Planet etc.) as films and other forms.

Ovirew
Ovirew

Oh well, video games aren't an absolute necessity and other things should be more important. Maybe they will find some other way to make up for it, who knows.

wonzan
wonzan

This will be reversed come the re-elections. The people that took a chance and voted lib dem will go back to voting for labour and labour will reinstate the tax break.

zeniftan
zeniftan

The UK will live to see a better day in the next few years. All we have to do is be smart about the ways we each personally spend our money and weather the storm out. And wait for the sun to pop out from behind the clouds. It's bad now, but my thinking is that while it may get worse, it also leaves space for things to get better again. So I repeat, weather the storm and wait patiently for the sun to pop out above the clouds. (Please bare in mind that I was almost made redundant over 2 weeks ago, and I STILL have a possibility of redundancy yet to come up. Sure I'm scared but I'm not going to die from this situation and this whole situation is driving me very hard to work VERY hard for what I want. I really don't envy my future competitors.)

risingsunbronco
risingsunbronco

UK is in serious bugdet troubles; the politicans had to do what they had to do to close the budget deficiet, but it still sucks for the video game industry.

GamerLegend10
GamerLegend10

@ duke-nukem11 yeah but by doing this they will be stopping something that would help out our economy and therefore be worse for the country in the long run, which is typical for Tories they have short term solutions which turn into long term problems.

kavadias1981
kavadias1981

@thesmiter I'll have to whip up something myself ala Fallout 3. Rock it Launcher maybe? They would never survive the brutal assault of teddy bears and coffee mugs. Yarhahahahaha! Ok, time to take a break from Fallout 3 methinks....

thekodaman
thekodaman

The government is nearly bankrupt and the country on the edge of economic ruin thanks to the previous government's reckless spending aimed at nothing more than buying votes from the people. Wake up people, video games are not an important part of the wider economy so don't denounce this as another attempt by the "evil baby-eating" tories to put down the common man. I'm fairly certain you all would be complaining if instead of preventing the economy from tanking due to bloated spending they wasted taxpayers money on silly taxbreaks for small, unimportant industries.

thesmiter
thesmiter

@ kavadias1981 You can't really own firearms of any kind in the UK. Even the regular police aren't armed. Big Brother doesn't trust its 'citizens' with firearms, and recognizes the need for 24 hour surveillance of said subjects.... er, 'citizens....' Edit: I believe some kinds of hunting shotguns are allowed, though. But God help you if you try and use them in self defense...

Fenton_42
Fenton_42

Can we try and get some perspective here? I appreciate that the UK games industry does most likely produce a sizeable income, but it is still a fairly niche market - there are other areas where the money would be better invested. Do you know how hard it is to find the most menial, low paid job in any sector at the moment? As for the VAT increase, were people ecstatic when it was dropped by the same amount for about a year? No, they dismissed it as a futile gesture. And the truth of the matter that a VAT raise is one of the more efficient ways of generating venue. There are ways to get around income tax (eg: tax havens) but you can't get around VAT. Personally I'm worried about what's going to be done with higher education. If universities continue to be underfunded then they will just collapse in on themselves. Give it 20, 30 years after that and there will simply be no one with the skills for any industry, not just gaming. If the entire UK gaming industry must be sacrificed in order to keep our higher education afloat, I'd be perfectly ok with that. (appologies for the long post)

Toggy
Toggy

lol just like politician... get rid of of the cuts for a group of people then promise them better cuts are comming in the future... Then 1 year from now he will say, "Sorry insert_global_crisis has had us focused on other issues."

kavadias1981
kavadias1981

Good move there Osbourne, continue to choke the country until it is nothing more than a wasteland of the unemployed. If I ever meet him or Cameron, please, somebody, put a gun in my hand.

MacenKrace
MacenKrace

This blows big time. I mean wtf? I used to import games from UK since prices here in my country were like skyrocketing to 200-300% from what the UK had them priced at. However this does not disturb me as much as the thought that some gaming companies like 505 games, Ghostlight(there 3 are my favorites and I just had to mention them) and other companies that develop games there might just disappear.

shoemen22
shoemen22

@Stabby I was commenting on the fact that some people were talking about the makers of Red Dead and GTA considering i also live in Britain i think iam aware of the this but thanks for the concern

jtthegame316
jtthegame316

torries are scum hope we get them out when the next elections comes.

Stabby
Stabby

@shoemen22 Scotland is in the UK, IE affected by this. While I am bitter over this, I'm probably going to be more bitter come the cuts to public services. This budget is going to be a bad thing more many MANY sectors, not just gaming.

airshocker
airshocker

God forbid a VAT gets implemented in the US.

Stoneys_Rock
Stoneys_Rock

well screw shops now, I shall now forever ebay and import my games.

Saije
Saije

There should be a way to legally bind politicians to the pledges they make pre-election. The fact that this isn't already standard practice in enforcing them to deliver on the promises they make or they lose their office, disgusts me. Why do we allow ourselves to be ruled by lying, backstabbing, two-faced, cheats? Most of which, also happen to be incompetent. I'm not talking about school either, I'm talking about real genetic intelligence, not education. After all anyone can teach a monkey some tricks if they try, but would you want it running your country? True intelligence or lack thereof is in the blood... We need to stop letting these born fools run things.

zintarr
zintarr

Remember this Americans! When you hear the Queen Witch Nancy Pelosi and is Holyness Obama talk about a VAT just think of Englands upcoming 20% and ask yourself. Is it worth it?!

Adumboy
Adumboy

I live in Newcastle and we used to have a fair few development studio's up here, Venom went bust, Midway moved away, Rage have gone the only one left is the Ubisoft studio. These tax breaks would of helped regenerate the UK gaming industry, I work within the industry, just a small company that creates games for education and training. We would have benefited from the tax breaks and they would have been a huge help especially scince the goverment has also cut alot of the public sectors budgets which is where we get most of our business, we work closely with the CLC's which push for learning with technology and from the current budget cuts to councils these are looking like they are going to dissapear, the NHS was another place we where getting close to working with but with cuts to their budgets it looks like we are losing out on that money. I know this has been a long post but from some of the posts i've read it doesn't look like people understand that it's not just the big games companies who aren't benefiting it's also smaller companies. Thanks for reading if you read it all.

myungish
myungish

and people actually thought the tories would keep their word and that the lib dems stand up to them for their beliefs... politics is just a liar's game.

NickW1
NickW1

sambob530 Posted Jun 22, 2010 8:27 am GMT Why do people blame Labour? If it weren't for them, we may be even worse off than now. Just another broken promise from the Conservatives. Council tax frozen for England, but not Scotland, Wales or N.I.? Shocking. um council tax in scotland and N.I. has nothing to do with the uk government. they have devolved tax powers and anyway scotland already has a council tax freeze

tatu2004
tatu2004

@Auntbessie i agree with you on that..

shoemen22
shoemen22

Red Dead Redemption is a american game created by Rockstar San Diego while the Grand Theft Auto games are created by Rockstar North which is in Scotland

Takeno456
Takeno456

Man the U.K. just can't get a break these days. Hang in there guys.