TIGA proposes increase in VGTR to boost the UK's video games industry

LONDON, Feb. 1, 2021 /PRNewswire/ -- Today, TIGA, the trade association representing the video games industry, has published a new report evidencing the benefits of an increase in Video Games Tax Relief (VGTR) from 25 per cent to 32 per cent. The report, Boosting the UK Video Games Industry: Increasing Video Games Tax Relief (TIGA, 2021) analyses survey data from industry, data from government and economic modelling. The report demonstrates that a 32 per cent rate of VGTR would result in more investment, greater headcount growth and larger tax receipts for HM Treasury.

TIGA's research reaffirms the strong, direct, causal link between VGTR and the growth in UK games development companies and industry headcount. Average annual headcount growth from the date when companies could actually claim VGTR in 2014 until April 2020 has been 8.9 per cent. In a TIGA survey conducted in October 2020, 80 per cent of respondents that were able to claim VGTR in the past 3 years had done so. VGTR was introduced partly to enable the UK video games industry to compete on a more level playing field with its counterparts in countries including the USA and Canada, which benefit from a range of generous tax reliefs and grants. 

The research indicates that between 2021 and 2025 an increased rate of VGTR to 32 per count would have the following impact compared to the current growth scenario:

• 1,485 additional development staff in studios.
• 2,715 additional indirect staff.
• £255 million additional development expenditure.
• £233 million direct and indirect additional estimated tax contributions.
• £565 million additional estimated GDP contribution.

The report states that these figures are likely to be conservative as they do not take into account any impact of incremental start-up rate acceleration, acquisitions and additional inward investment that may be stimulated by such a material VGTR increase.

A 2017 government study showed the positive effects of VGTR on the UK video games industry. In response to a recent parliamentary written question, Kemi Badenoch MP, Exchequer Secretary to the Treasury, noted:

'Research showed that VGTR enabled developers to be more productive by giving them more stability and lowering their level of risk, enabling them to survive longer and look beyond immediate financial concerns to focus on expanding their business or improving their offer. The evaluation found concrete examples of inward investment, and indications that VGTR had stemmed the drain of UK talent to countries such as France and Canada.'¹

Dr Richard Wilson OBE, CEO of TIGA said:

"The UK video games industry is one of the sectors that the UK Government should aim to promote over the coming years. The industry supports economic growth in clusters throughout the UK: approximately 80 per cent of the workforce is based outside of London. The industry provides high skilled employment: around 80 per cent of the workforce are qualified to degree level or above. The industry is export focused: approximately 95 per cent of games studios export at least some of their content. The industry is relatively resilient to Coronavirus engendered lockdowns: as a digital sector work can be undertaken remotely.

"An Increase in the rate of VGTR would: enhance the appeal of the UK as a centre for games development; encourage investment; promote the development of new IP; boost studio formation and longevity; encourage employment creation; support economic growth across the UK; and enable our industry to secure a larger share of the global market for games production."

About TIGA

TIGA is the network for games developers and digital publishers and the trade association representing the video games industry. For more information visit: www.tiga.org 

Video Games Tax Relief, a measure TIGA was instrumental in achieving, has been available to UK games companies since August 2014 and has driven growth in the sector. See: https://tiga.org/policy-and-public-affairs/games-tax-relief

Get in touch:

Tel: 0845 468 2330
Email: [email protected]
Web: www.tiga.org 
Twitter: www.twitter.com/tigamovement 
Facebook: www.facebook.com/TIGAMovement 
LinkedIn: http://www.linkedin.com/company/tiga 

¹ UK Parliament, Question for HM Treasury - Video Games: Tax Allowances, 27 January 2021, link

SOURCE TIGA