Insights TIGA publishes report evidencing benefits of strengthening Video Games Tax Relief (VGTR)

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TIGA says that the report, “Going for Growth: Growing the UK Video Games Industry Through VGTR”, which includes analysis from Games Investor Consulting, demonstrates that increasing the rate of VGTR from its current rate of 25% to 32% of qualifying expenditure would create nearly 1,900 additional full-time development jobs over five years.

TIGA explains that VGTR was introduced partly to enable the UK video games industry to compete on a more level playing field with its counterparts in countries including the USA and Canada, which benefit from a range of generous tax reliefs and grants.

TIGA says that the research reaffirms the strong, direct, causal link between VGTR and the growth in UK games development companies and industry headcount. The UK’s developer headcount declined by an annual average of 3.1% between 2008 and 2011 before returning to growth in the year that VGTR was announced. The average annual growth from the date when companies could claim VGTR in 2014 until December 2021 has been 9.9%.

The report also shows that between 2022 and 2026, raising the rate of VGTR relief from its current 25% to 32% of qualifying expenditure would have the following impacts compared to the current growth scenario:

  • 1,868 additional development staff in studios (out of a total of 33,906);
  • 3,415 additional indirect staff;
  • £333 million additional development expenditure;
  • £305 million direct and indirect additional estimated tax contributions; and
  • £739 million additional estimated GDP contribution.

TIGA says that an alternative way of bolstering VGTR would be to increase the proportion of qualifying expenditure from 80 to 100% while maintaining the current relief rate of VGTR at 25%. This could have the following beneficial impacts:

  • 1,668 additional development staff in studios (out of a total of 33,372);
  • 3,049 additional indirect staff;
  • £298 million additional development expenditure;
  • £272 million direct and indirect additional estimated tax contributions; and
  • £659 million additional estimated GDP contribution.

TIGA says that these figures are likely to be conservative as they do not take into account any impact of incremental start-up rate acceleration, acquisitions and additional inward investment that may be stimulated by such a material VGTR increase. To read TIGA’s press release in full, click here.