Impact of the Autumn Budget on UK Gaming Companies

The UK gaming industry has received minimal attention in the recent Autumn Budget, prompting trade bodies Ukie and TIGA to call for improvements to tax relief. According to Chris Buckden, a tax advisor at Moore Kingston Smith, the changes are primarily administrative, focusing on the transition from Video Game Tax Relief to Video Games Expenditure Credits, as well as clarifications on relief transfers between group companies. Beyond these specific changes, companies should be aware of broader adjustments, including increased dividend tax rates, which will affect company owners and directors who receive dividends rather than a significant salary. The limits for Enterprise Investment Scheme and Venture Capital Trust investor relief schemes have also been modified, potentially boosting investment potential in the UK. Additionally, the limits for Enterprise Management Incentives option schemes have been changed, allowing companies to grant share options to employees. These changes will enable larger companies to attract and retain talent through share options rather than just salary and bonuses. However, for smaller studios with fewer than 250 staff, this is less relevant as they already qualify. Selling a company to an Employee Ownership Trust has become slightly less attractive, as only 50% of companies will now be eligible for Capital Gains Tax relief, down from 100% previously. Furthermore, changes have been made to salary sacrifice pension contributions, which are now slightly less tax-efficient due to the capping of National Insurance contributions at £2,000. Although this change will not take effect for four years, it is essential for companies to be aware of it. Both Ukie and TIGA believe that enhancing Video Games Expenditure Credits will have a positive impact on the economy, particularly as the government focuses on growth. UKIE CEO Nick Poole stated that targeted measures for the UK gaming industry can drive significant economic and cultural value, and that introducing improvements to tax reliefs, such as VGEC, would support studios in scaling, creating high-quality jobs, and competing globally. TIGA CEO Dr. Richard Wilon echoed these comments, citing research that shows enhancing VGEC could create over 6,000 new jobs. The video games industry generates £12 billion in Gross Value Added annually, supports over 73,000 jobs, and contributes £2.2 billion in tax revenues. Strengthening VGEC will promote economic growth and ensure the UK remains a leader in game development. Ukie and TIGA have signed an open letter calling for government support for a new Games Growth Relief plan, which could create thousands of high-quality jobs.