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UK govt decides on 25% tax relief for games studios

Chancellor reveals baseline benefit for upcoming tax breaks structure

The UK government will introduce a tax relief of 25 per cent for selected games in development, chancellor George Osborne has revealed.

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"Following consultation on their design, the Government will ensure that the reliefs are among the most generous in the world by offering a payable tax credit for all three reliefs worth 25 per cent of qualifying expenditure," read a Treasury statement.

The tax break is expected to come into effect after next year's budget report, meaning it is still subject to change. Games studios large and small will be able to take advantage on the state aid providing their projects meet certain cultural requirements (CVG's analysis here)

Osborne revealed in March's Budget speech that the games industry would benefit from a scheme similar to that currently enjoyed by the UK film industry, "subject to State aid approval and following consultation", although no specific details were announced at the time.

Tax relief for the creative industries, including film and television, are expected to come into effect from April 2013, with full details of their workings to be confirmed on December 11.

For more than five years, various games industry bodies have campaigned for government support to help balance out the tax break advantages employed in overseas countries such as Canada. In the intervening years, it is believed that the UK has slipped to fourth place in the global league of game developers (calculated by workforce), as talent moves abroad for better opportunities.

The Coalition's decision to implement a 25 per cent tax relief rate is notably lower than the 37 per cent relief employed in certain regions of Canada, though Britain also boasts a highly competitive corporation tax of 21 per cent.

Additional reporting by Rob Crossley

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