Impact of the Autumn Budget on the UK Gaming Industry

Following the Autumn Budget announcement, UK gaming industry trade bodies Ukie and TIGA have emphasized the need for improvements to tax relief measures. The recent budget did not address the issue, prompting both organizations to call for action. According to Chris Buckden, a tax advisor for the media and creative sector at Moore Kingston Smith, the changes to video game tax relief are primarily administrative, focusing on the transition from Video Game Tax Relief (VGTR) to Video Games Expenditure Credits (VGEC) and clarification on relief transfers between group companies. Beyond these specific changes, the budget introduced broader measures that will affect gaming companies, including increased dividend tax rates and adjustments to investor relief schemes. These changes may impact company owners and directors who receive dividends, as well as the investment potential for UK-based investors. Additionally, the budget modified the limits for Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) investor relief schemes, which could boost investment in the industry. The limits for Enterprise Management Incentives (EMI) option schemes have also been adjusted, allowing larger companies to attract and retain talent through share options. However, for smaller studios with fewer than 250 staff, this change may not have a significant impact. The budget also introduced changes to the Employee Ownership Trust, making it less attractive for company owners looking to exit, as only 50% of companies will be eligible for Capital Gains Tax relief. Furthermore, the budget modified the rules for salary sacrifice pension contributions, capping National Insurance contributions at £2,000, although this change will not take effect for four years. Both Ukie and TIGA argue that enhancing the Video Games Expenditure Credits (VGEC) system would 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's games and interactive entertainment industry can drive significant economic and cultural value. Introducing significant improvements to the UK's system of tax reliefs, particularly VGEC, would give studios the support they need to scale, create high-quality jobs, and compete globally. TIGA CEO Dr. Richard Wilon echoed these comments, citing research that shows improving VGEC could create over 6,000 new jobs. The video games industry generates £12 billion in Gross Value Added (GVA) annually, supports more than 73,000 jobs, and contributes £2.2 billion in tax revenues. Enhancing VGEC would reduce the cost of game development, encouraging investment and the creation of high-skilled jobs. TIGA research suggests that a VGEC with a rate of 53% on qualifying costs for games with budgets of up to £15 million could create over 6,000 jobs and generate tax revenues for HM Treasury. Ukie and TIGA have signed an open letter to the UK government, calling for support for a new Games Growth Relief plan that could help create thousands of high-quality jobs.