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UK Video Game Tax Relief Cancelled
Stoobalou writes "UK game developers have just been dealt a financial blow by Chancellor George Osborne in his first budget, which sees the coalition government scrapping the video game tax relief plans promised by Labour. In his speech today, Osborne simply said the 'planned tax relief for the video games industry will be cancelled.' According to the government's budget report, the cancellation of video game tax relief will save the government £40 million in the 2011-2012 financial year, and a further £50 million in each subsequent year."
Because obviously, computer games are unproductive and a waste of time and taxpayers money... try telling that to Blizzard, EA, Rockstar and many other companies with billion dollar + profits.
Actually, an indie game developer in the UK has said that this is not a huge deal (for him at least) because they lowered the business tax rate 1% instead, and this way he doesn't have to fill out any forms for his games business to get a boost.
This game will waste your life. Don't clicky!
TIGA CEO Richard Wilson said: "I don't belieeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeve it!"
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
.. is that this is part of an "austerity" budget aimed at cutting £1.3bn of debt, including public sector pay freezes and an increase in VAT to 20% among other measures. In light of that losing £40-50M in "promised" tax cuts (promised by Labour party, recently out of power) for the gaming industry isn't exactly the worst problem the British are facing. Sounds like one of the more sensible cuts in fact.
The economy is bankrupting the UK. Fark puts it succinctly: "Facing a massive budget deficit, the UK to cut welfare, increase the VAT to 20 percent, and impose a new tax on anyone who brings one of those damn vuvuzelas back from the World Cup". Chancellor George Osborne is doing what all countries should do in that situation but are afraid to do, due to the unlikelihood of reelection. The country is damn near bankruptcy, the whole European continent is over-leveraged on debt and Britain is doing their best to make an example by balancing their budget. Tax handouts to the entertainment industry don't help balance the budget. Insert snarky comment about US legislators growing some balls and balancing our budget here...
Here's some more info on the subject:
moox. for a new generation.
Yes it does, they're lowering corporation tax and employers' NI contributions.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
They are cutting Corporation Tax, employer contributions to National Insurance and (if I read correctly) new start ups wont have to pay NI on the first ten employees they hire. So rather than provide a boost for that one industry, those breaks are helping out all industries, including the games industry. Makes sense to me.
I work in the games industry too, and I'm not at all bothered by this tax relief being cancelled. It wouldn't have helped the average developer one bit, all it'd have done is give the big cats who run the companies even more money.
The only argument that really holds any weight in this discussion is for the giant multinationals who might decide to relocate their UK studios elsewhere for tax breaks. Even if the big companies move, those people will probably still find jobs elsewhere anyway. If they stay, we're just giving UK government money to a foreign company. Seems a bit daft really.
Bad news for the video games industry but it's not a total disaster. They get to benefit from a drop in corporation tax, and if they are smart, they'll take advantage of the 50K tax break for setting up a business outside of the SE hot zone.
All anyone such as Rockstar needs to do is open a new software house in Bradford, adjacent to and working with Rockstar Leeds for example and they get a reasonable tax break.
So while they've been kicked in the teeth, there are still some workable benefits to be had from the new budget.
It has become appallingly obvious that our technology has exceeded our humanity. --Albert Einstein
Does the Arts Council still exist (The Raffia Mafia - if my "Yes, Minister" is correct)? TIGA should join with them and snuffle around that little grant factory.
If he's the Walrus then can I be a penguin please?
Corporation tax is being dropped 1% every year from *25% (*current) down to 24% making it the lowest tax of its kind in the Western world.
Small businesses will also see a 1% drop in the rate of tax (between 300K-1.5M). Small businesses also have to start paying NI at a higher threshold, which means the first few employees are now much cheaper.
So, yes, this is a blow - but it might actually not hurt the small games industry at all and only hurt the big industry for a few years until we get down to that insane 24% corporation tax.
So much for the story about cuts being to pay off the national debt.
Um, I think you'll find the UK has a huge variety of traditionally made cheeses, above and beyond that of many continental countries.
That is up for debate. The initial reaction the global recession was to spend instead. Spending keeps businesses running, keep people earning wages and paying taxes and from that you can spend again.
Stop spending and business stops, people stop collecting wages and stop paying taxes and then you can't spend.
The UK is however not just facing the global recession but the fact that the UK has been slipping for decades. The recession has just made it clear just how rotten the UK economy is. It has/had a huge financial sector but suddenly after the banking crisis it has become clear just how much hot air that was. Meanwhile production has fallen to an all time low, the UK produces even less then the US, it is a consumer/service based economy and that economy is prone to bubbles.
The UK government might have no other choice but to cut spending but these cuts are only going to hurt the economy more and more. Consumer spending will drop like a rock as people save instead for the downpour that they now know is going to come. I predict fore-closures of small businesses will sky-rocket and medium business will soon follow.
Just ask any rich person. In time of prosperity, save. In times of recession, spend. Sadly, right wingers want to spend (on tax cuts) when time is good and then when times are bad they got nothing left to spend.
Just how is the economy going to recover if nobody has any money to spend?
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
Well, stout yeoman, four ounces of Caerphilly, if you please.
Loose lips lose spit.
I'm international and fragile - currently, none of my clients are in the UK, so every pound that I earn is a net increase for the UK economy. Somehow, because I'm self employed, I get nothing from this budget. Maybe I'll move to France and enjoy nicer weather...
I am TheRaven on Soylent News
The UK has a huge public debt (and growing) at the moment because of lack of fiscal probity in the last years of the previous government and because a lot taxpayer's money was used to "saved the banks" (the same banks that in the years before that payed billions in bonuses to traders).
The Chancellor (i.e. the Government Minister that takes care of Finances) has just announced a new budged where cuts are all over the place and Value Added Tax (i.e. Sales Tax) has gone up, all this to try and control the public debt.
Let's get some perspective - there have been cuts in spending in things like Education and Social Services: as a tax payer in the UK, no mater how much I like gaming, I don't care that a meaningless, non-strategic industry is not getting a hand-over of taxpayer's money anymore. (In fact, why should they be given taxpayer's money at all even in the good years?)
So this story is:
a) Not really news, since everybody is getting cuts
b) Really just saying that a wrong (giving my money to a special interest group) has been righted.
Or maybe a nice piece of Wensleydale Gromett.
Does the Arts Council still exist
Yes but its 25% smaller than it was yesterday.
I'd say replying to the wrong post (and/or not understanding what quotes are) is pretty pathetic and ignorant.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
Are you a sole trader? If so you should gain something from the NI reductions. If you have your own company then you'll save some corporation tax too.
And if you think it's any better in France, you're hopelessly naïve. The tax authorities there are absolute bastards, and good luck dealing with them if you don't speak fluent French.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
What do you think they should do, put everybody's taxes up to 100% so that nobody bothers working, companies all emigrate and the government ends up with all of nothing?
It's not like the situation left any good options; rather it was case of choosing the least bad course. There's a fine line, and I think they got it more or less right. But only time will tell.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
A list of some of the things the UK apparently hasn't produced in years, which is relevant to both the OP and your post: http://www.giantbomb.com/united-kingdom/95-492/list-of-video-games-made-in-uk/35-9288/
But what if that cancellation got overruled? Then the headline would say:
Tax relief cancellation overruled.
tax. Oh no. ...relief. Oh yes. ...cancellation. Noooo. ...overruled. Yessss.
The video games industry is of value, it is skilled work. Perhaps the UK Government is confusing developing games with playing games.
It makes sense to make the UK attractive to Video Game Companies, there is the technical skill. When development finishes the game brings in world wide revenues for a cost of pennies per copy. They are a fantastic export practically a license to print money.
It might seem as if Video games are just fluff but looking at the rest of the software industry its largely a market defining leader and possibly some free alternatives. Theres very little demand for commercial software that isn't the industry standard or free.
Video games are unique, like books or films there isn't really a substitute for the real thing for anything but simple games.
The current British government seems determined to make everybody scrimp to try and reduce the deficit. But the effect will be to reduce everybody's spending to the minimum and increase unemployment by reducing local demand. By growing the economy, increasing employment, increasing production and exports the tax base is increased and the revenues will increase and the deficit will be reduced.
So what is going to happen to these skilled developers who are out of a job because other countries have made it more attractive for companies to do their development there. Maybe some will find alternative work in the UK or perhaps move to other EU countries either way Britain isn't making best use of its assets.
Blarney Quality Restaurant, Plants
Correct me if I'm wrong, but I don't recall it being marketed as a training course.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
"the UK one is caused because the country hasn't actually produced anything in years"
Yeah, except the UK is still sitting at about the 5th to 7th largest economy in the world by manufacturing output and in the top 5 for service sector output. Contrary to popular belief, it's really only it's position in agriculture on the world stage that's declined.
That's quite an achievement for a country that hasn't produced anything in years.
No, Britain's problems were caused by it's reliance on the service sector in the face of the US' credit crisis in which it was deeply involved.
Britain doesn't have a problem with money or assets per-se, it has so many programs it could cancel (i.e. Trident) if push came to shove to pay it's debts, the issue is that the previous government over-extended public sector, such that we have more public sector expenditure than we can realistically afford. Britain's pain is merely going to have to be a scaling back of the public sector programs we have, coupled with higher taxes to pay for the rest of it- this isn't Britain's only option, because as I say, Britain has so many schemes and so much expenditure and so forth still that it could cut if it really needed to it's really not at much risk.
In contrast, countries like Greece don't have big things like nuclear weapons programs with money set aside for that they can cut now that it's hit crunch time. The same goes for Spain and so forth.
So effectively, like the US and France, whilst Britain doesn't have a lot of actual cash floating round, it does have a lot of expenditure planned, or assets to sell off should things get really bad.
In other words, Britain, like the US and France could solve it's financial situation tommorrow if the population was willing to accept the loss of some massively important albeit luxury programmes people have gotten used to having such as Trident, new aircraft carriers, child tax credits, free care for the elderly and that sort of thing. Of course, that wouldn't be pleasant for the people who depend on those schemes, which is why the government is trying to solve the debt problem a bit more slowly, and a bit more carefully.
Effectively, it has simply deemed that the UK video game industry tax relief is one of those small things that can be cut without the vast majority of the population actually giving a flying fuck, and without any real harm to the economy.
Conveniently the BBC have produced this tool that illustrates the rough point quite well:
http://news.bbc.co.uk/1/hi/business/10373060.stm
Try moving the welfare slider to see what I mean- in one fell swoop most the deficit could be eliminated, but the key is to do it with least impact on people possible.
That website is practically push-polling; for example, it doesn't offer the chance to cut some of the £5 billion we spend on prisons (presumably by not throwing non-violent drug users into prison when they steal to support a habit, just a thought...)
If we can put a man on the moon, why can't we shoot people for Apollo-related non-sequiturs?
A list which doesn't include Pitbull Syndicate (makers of Test Drive 4,5,6,Overdrive and LA:Rush, among others) or Midway Newcastle (who bought them out, made Wheelman, then went bankrupt).
There are probably a few others missing too.
Yeah, it's extremely simple but as I say, it demonstrates well the fact that if things get bad it's easy for Britain to make money.
If the country was on the verge of bankruptcy, would saving a phenomenal £60bn at the expense of £30 a week less state pension really be that bad? It'd certainly be better than the alternative of increased debt payments and an eventual inability to afford any state pension at all! The point is it demonstrates that Britain has got plenty it can cut, and that's a good thing. It's when you're both bankrupt and have nothing to cut either that you need to worry.
Ohhhh... the cat's eaten it. Sorry.
Absit Invidia
Hmm... it doesn't roll off the tongue very well...
"Action without philosophy is a lethal weapon; philosophy without action is worthless."
Ed Vaisey, now the Creative Industries Minister in the Department of Culture Media and Sport was a keynote speaker, and actually took time out of election campaining to be there.
The general gist of what he was saying was that should the Conservatives get elected, then he would be pressing for tax breaks for UK game developers (he also claimed the idea of tax breaks was partly his idea, but that Labour had taken the credit).
Also, at a Playing The Game panel session (http://www.gamesindustry.biz/articles/industry-support-is-number-one-priority-vaizey), he claimed
You are competing against countries that are giving active fiscal support to the videogames industry, and I think it's a given that you have to put something in place to, quite frankly, level the playing field - so it is my absolutely number one priority, should we win the general election."
O rly?
http://www.phasiclabs.com/
Well you've pretty much summed it up, but I'll add that when it comes to having a big bloated public sector Greece and Spain (plus Belgium and France) are in an entirely different league. Jobs for life (many of which don't really need doing - just as well because they don't bother to do them anyway), early retirement with an index linked pension - and still they're on strike at the slightest excuse.
Right now I see the ferries to the Greek islands are blocked by a bunch of hooligans. So there's hundreds of tourists stuck on the docks, fuming and swearing they'll never go back there, when they should be in shops and taverns putting money into the local economy.
Do these morons think there's an endless pot of gold that the government is withholding from them just to be mean?
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
How had this been modded funny? The UK has about 700 regional cheeses. In comparison, France (who are supposed to be a great cheese nation) have only 600 cheese varieties.
British cheese is not only terrible, it is also quite expensive.
A marvel of its own kind.
I am French and I live in the UK, love cheese, and found British cheese so bad, even something you could get at a farmer's market, that I only buy supermarket cheese imported from France.
Because, of course, the French would *never* be biased against things English...
Yep, it did make me chuckle the other day when I saw the French were raising the retirement age to 62- poor sods, however will they cope?
Here in the UK though if you've seen the comments from the unions their attitude is no different- according to the unions in the UK we can't make cuts and we can't raise taxes. I'd love to know what planet the unions are on, I'd love to know where exactly they think we're going to find £150bn without cutting or raising taxes. That's a common trait amongst unions it seems though, they're often more than happy to whine and moan about everything, but they never actually offer any alternative solutions to the problems, just claim the solutions everyone else comes up with can't work.
So do all skilled jobs get tax relief in the UK? Does software development in general get a tax relief? I don't think so.
Indeed, the argument they were making was not on the grounds of it being skillful, but on the grounds of it being a creative medium, arguing it should be treated the same as the film industry (which does get tax relief, AIUI).
So what is going to happen to these skilled developers who are out of a job because other countries have made it more attractive for companies to do their development there.
Which countries are more attractive, OOI?
The British elected the Conservative Party to office, and they began by cutting expenses and raising taxes in a time in great need. How novel. Here in the United States, we gave the Republicans 8 years in control of the government, at least 5 of which were spent owning both houses of Congress as well as the Presidency---and we ended up with a big deficit. We even had a surplus to begin with! In fairness to Bush, he did try to reduce costs on Social Security, but on every other issue it was clear that the deficit was the last thing on his mind. Obama is no better, but at least no one expected better of him.
Entitlement programs and the military are the two largest costs to the federal government, and neither can be touched without erupting violently on whoever had the nerve to try to cut them down to size. And until they go, young people across the country will be robbed to pay for the retirements of those responsible for this deficit---a payment for which they will never receive compensation, as these entitlement programs will have collapsed by the time they grow old themselves.
US made might be rare but not as rare as UK made.
Where do you live? I suspect the story might be different from within the EU than within the US.
US-made goods are actually very rare in the UK- I used to note that my disposable contact lenses and aftershave were some of the few things I owned that were made in the US, but the same type of lenses and aftershave are now made in Ireland and (IIRC) Switzerland respectively. Most things here are either made in the Far East (electronics, mass-produced plasticky stuff and the like) or within the EU. I suspect that within the US it's either the Far East or NAFTA(?) countries instead.
But yeah, we do make jack s**t because obviously call-centre jobs are^w were the future of our economy.
BTW, 40 million is still absolutely f*****g peanuts on the scale of things, regardless.
"Slashdot - News and Chat Sites Deviant". (Click "homepage" link above for details).
well osborne suggested during the election that the tories would not increase VAT.
http://conservativehome.blogs.com/thetorydiary/2010/04/george-osborne-aims-to-strangle-labours-vat-attack-at-birth.html
SURELY NOT!!!!!
I think it's a bit runnier than you'll like it, sir.
If you can read this, it means that I bothered to log in.
Ireland might be one option Microsoft and Apple seem to see an advantage. Artists do pretty well too and theres no need to learn a second language.
http://news.scotsman.com/politics/Taxbreak-loss-may-push-video.6377787.jp
"Games makers warned they might be forced to leave Scotland as a result of the move.
Manufacturers in Dundee have led the world when it comes to making hi-tech games. The previous Labour government had offered them tax relief they felt would increase spending on research and development in the UK by £457 million and create 3,000 jobs.
The industry is estimated to contribute £1 billion to the UK's GDP each year.
Colin MacDonald, from Realtime Worlds, which created the Grand Theft Auto series, said he was "hugely, hugely frustrated and disappointed".
He added: "We would hate to move away, but we're a business. When Canada is 40 per cent cheaper and France has built-in tax credits, you're looking at saving millions a year. We have to take that seriously."
Mr MacDonald said without the tax incentive many gaming companies would not be able to experiment and innovate, which would leave them falling behind in a global industry worth billions."
Blarney Quality Restaurant, Plants
"We have no plans to do X" != "We will never do X". Bear in mind that the incoming government don't get to see the books in advance. I mean, do you call this sensible grown-up politics?
It's still lower than in Belgium and Denmark, and only a gnat's chuff higher than France. Sooner or later the barmy bastard Brussels bureaucrats would have forced us to put it up (or in their language, "harmonized" it) anyway.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
I think you completely missed the point.
Surviving on £30 a week less is better than the alternative of having the entire economy fail because if it did your £30 a week wouldn't be worth shit anyway.
I'm not saying we should decrease the state pension, I'm not saying that at all, I'm just pointing out that if we really reached crisis point it would be at least one option that would allow us to avoid complete and utter national meltdown.
I think at a time when they are making cuts, they shouldn't be reducing tax for corporations. That doesn't imply raising them, let alone to 100%.
No, it's because it makes the thread harder to follow when stupid idiots like you make nonsensical replies.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
I think you should read the whole post before replying.
But in any case you lost, Gordon, so fuck off and write your memoirs or something.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
I read all four sentences. They were all just as shit as the first phrase.
Except for the small issue that the existing payments are barely enough to live on as it is. People on welfare generally have more in common with the Greek government than the UK one: there's not that much that can be cut. (Also, have you taken into account the risk that these people might - probably correctly - conclude that they're better off with no economy at all, that the entire capitalist system is structured to starve them so the super-rich can live in a bit more luxury? This danger was more or less the reason the welfare state was created in the first place.)