TAX NEWS - June 2010

Osborne cuts tax relief for the UK games industry

The UK coalition government has slashed the British gaming industry's proposed tax breaks.

The previous Labour Government had initially drawn up plans to offer the games industry a 20 per cent tax break for production companies similar to the favourable taxation treatment the UK offers the films industry.

However, Chancellor George Osborne shattered the dreams of the UK's games companies in just one brief sentence of his emergency budget speech. He said, "We will not go ahead with the poorly-targeted tax relief for the video games industry."

Why it was deemed poorly targeted when other UK entertainment industries are offered exactly the same tax incentive is anyone's guess.

What's galling for the games industry is the fact that the previous Labour government went out of its way to treat it fairly. Now Osborne's reversal seems like a sandy kick in the face.

The Entertainment and Leisure Software Publishers Association (ELSPA), which lobbies on behalf if the UK games industry, summed up what everyone and his dog are thinking.

ELSPA director general, Michael Rawlinson, said in a statement, "Bearing in mind the pre election commitment towards tax breaks made by the Conservatives and the Liberal Democrats we are extremely disappointed by the outcome of today's Budget. Our industry will be rightly puzzled as to how tax breaks can be lauded before an election, only to be seen as 'poorly targeted' and scrapped just 6 weeks later."