U.K. to bow video games tax credit

Move helps Brits compete with Canadian biz

The U.K. government plans to give tax breaks to the local videogames sector similar to those that benefit the film biz. Confirmation came from Chancellor of the Exchequer Alistair Darling in his budget Wednesday, which sets out changes to fiscal policy for the next 12 months.

Details were sketchy; Darling said the government would consult on how the tax relief would work and then introduce it, subject to approval from the European Commission.

The move follows years of lobbying from vidgame trade body Tiga, whose CEO Richard Wilson hailed the measure as “an inspired decision.

“Games tax relief will increase employment, investment and innovation in the U.K. videogames sector. It will ensure that the U.K. remains a world-leading developer of videogames,” he added.

The industry, which spawned hits including “Grand Theft Auto,” adds £1 billion ($1.5 billion) a year to the country’s coffers. But it’s losing business and talent to countries such as Canada, where Quebec offers a 37.5% salary rebate to studios plus income tax holidays for U.K. staff that relocate. Tiga says the gaming workforce has fallen by 6% since 2008.

Darling addressed this, saying, “We need to keep British talent in this country,” adding that “we have world-class industries, but our competitors are not standing still.”

To qualify for tax relief, games producers are likely to be subjected to “a cultural yardstick” test, similar to that adopted in France under which games are scored and ranked in such areas as innovation and where they are made.

Darling also confirmed plans to roll out high-speed broadband funded by a $9 annual tax on landline phones.

However, all these measures may be derailed if the government is defeated in the general election that must be held by early June at the latest.