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."

Comments

Not that bad for indie devs, at least

[gravos]

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.

Re:Not that bad for indie devs, at least

[cappp]

The UK isn't the only one to make the move. Wisconsin recently decided to scale back it's tax incentives for the entertainment industry as reported http://www.gamepolitics.com/2010/06/16/wisconsin-scales-back-film-interactive-tax-incentives - seemingly largely based on their experience with the film industry

While more aggressive incentives did manage to lure the Public Enemies production to Wisconsin, after doling out $4.6 million in tax credits to the production, it was estimated that the filming of the movie only brought in $5 million in local economic activity

Seems the UK government was aiming for a wider ranging effect with it's budgeting as noted http://www.develop-online.net/news/35205/Tax-Breaks-the-deal-is-off -

As part of his Emergency Budget, Osborne said that subsidies for developers first proposed by the previous Labour government in April will not come into force. He described the suggestion as 'poorly targeted' as part of a wide-ranging budget that outlined a number of cuts and tweaks to the economy designed to reduce the deficit and facilitate business growth. And despite saying "I want a sign to go up above the British economy that says 'open for business'," he made it clear that this will not be made by selectively offering tax cuts to specific fields such as games.

And the other half of the story...

[Hadlock]

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:

from the NYT http://www.nytimes.com/2010/06/23/world/europe/23britain.html?hpw
Britain Unveils Emergency Budget
LONDON -- Setting the scene for years of potential strife with the powerful public-sector unions and their allies in the Labour Party, Britain's new coalition government on Tuesday unveiled the most severe package of spending cuts and tax increases since the early days of Margaret Thatcher's era.

George Osborne, the chancellor of the exchequer, held the budget box as he left 11 Downing Street for Parliament on Tuesday.
After only six weeks in office, the government of Prime Minister David Cameron took what his coalition of Conservatives and Liberal Democrats acknowledged was a historic gamble: that austerity measures will help balance the government's books without pitching the country into a double-dip recession.

The cuts and tax increases, including average budget reductions of 25 percent for almost all government departments over the next five years, will make Britain a leader among European countries, including Ireland, Greece and Spain, competing to show they can slash spending and appease investors worried about surging debt. But the sharp reductions defy conventional economic wisdom, which holds that governments should increase spending to stimulate growth when the private sector is weak.

The steps outlined to the House of Commons by George Osborne, the chancellor of the Exchequer, would cut the annual government deficit by nearly $180 billion over the next five years, shrinking Britain's public sector and instituting tough reductions in public housing benefits, disability allowances and other previously sacrosanct aspects of the country's $285 billion welfare budget.

Only health and international aid spending would be protected from the 25 percent cuts for government departments by 2015, the steepest fiscal spending reductions since the 1930s. Mr. Osborne also announced a two-year wage freeze for all but the lowest paid among Britain's six million public servants and a three-year freeze on benefits paid to parents for rearing children, in addition to new medical screening for people claiming disability benefits, part of a bid to cut $16 billion from the annual welfare budget.

Mr. Osborne also announced a raft of tax increases, though he was at pains to say that the government's plan to sharply reduce the country's $1.4 trillion national debt would rest on making roughly four pounds in spending cuts for every pound in tax increases, a point of considerable political weight in a country that is already among the highest-taxed in Europe.

The new taxes include an increase next year to 20 percent from 17.5 percent in the value-added tax on most goods and services, and an increase in the capital gains tax, to a new high of 28 percent, to curb what Mr. Osborne described as rich people in Britain "paying less tax than the people who clean for them." At the same time, changes in income tax will remove nearly 900,000 of Britain's poorest people from the income tax system altogether, and corporate taxes will also be reduced over a five-year period, to 24 percent from 28 percent.

However..

[severn2j]

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.

Re:Dollars? US companies?

[lisaparratt]

Um, I think you'll find the UK has a huge variety of traditionally made cheeses, above and beyond that of many continental countries.

Re:Massive U-Turn?

[Grantbridge]

Just because the minister for the Department of Jam wants more jam subsidies does not mean that the Chancellor will pay for them! I don't think he has lied or misled you, he just doesn't have the clout to persuade Osborne to cut the health budget and pay for games instead.

Re:Dollars? US companies?

[lisaparratt]

Because, of course, the French would *never* be biased against things English...