TIGA: Video Game Expenditure Credit offers only 0.5% more than current tax relief
TIGA has raised concerns about the upcoming Video Games Expenditure Credit and has called for the UK government to bring the new incentive more in line with the current Video Games Tax Relief.
The trade body said growth "could be jeopardised" unless the VGEC is introduced with careful consideration.
The VGEC was announced earlier this year, promising a rate of relief of 34% on 80% of 'qualifying expenditure' — a significant increase on the 25% offered by the VGTR.
However, TIGA observed that this 34% is claimed as an income receipt, which is subject to Corporation Tax, and essentially equates to 25.5% — a 0.5% increase on the current relief.
The VGEC will also see the removal of the eligibility of European expenditure, which is offset by withdrawing the £1 million sub-contracting cap. This means qualifying expenditure will only be on goods "used or consumed in the UK."
"It is vital that the new Video Games Expenditure Credit strengthens our world leading video games industry," TIGA CEO Richard Wilson said.
"Enabling connected party profits, simplifying the claims process, and providing guidance on what constitutes 'used and consumed products in the UK' are vital reforms. Increasing the rate relief from 34% to 39% would power job creation and investment in the sector."
TIGA has issued three proposals in response to the government's plans for VGEC, which will come into effect from January next year.
These include the need for the VGEC to adopt the same pricing rules as the VGTR because financial models such as the Special Purpose Vehicle (SPV) and the man-month rates model "would be adversely affected as any markup applied between two connected parties would be excluded."
TIGA also urges the government to
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