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EC approves UK corporation tax relief for video games

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The European Commission has concluded that UK corporation tax relief for producers of video games, contained in FA 2013 Sch 17, is compatible with EU state aid rules. This follows an in-depth investigation into the relief, started in April 2013.

The relief will come into effect from 1 April 2014. Finance Bill 2014 contains further legislation to make the video games relief compliant with EU law. The relief enables companies to be eligible for a payable tax credit worth 25% of qualifying production costs. It builds on the successful model of the film tax relief, which can be claimed on production expenditure in the UK, and the new high-end TV and animation tax reliefs.

There are currently around 500 games development studios in the UK, employing around 9,000 staff. In 2013, sales of video games in the UK totalled £2.19bn. It is estimated that the relief will provide around £35m of support a year to the sector.

Rachel Austin, tax director at Deloitte, said: ‘The relief will provide a huge boost to an industry that has faced fierce competition in recent years from developers in countries such as Canada and France, which already offer tax incentives ... The Commission has confirmed that its initial concerns have been addressed and that the relief is targeted at culturally British video games, which face difficulties in raising finance. The UK demonstrated that the proposed cultural test ensures that the aid supports only games that are of cultural value.’

Issue: 1211
Categories: News , Corporate taxes