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March 23, 2016
Ukie says that the Budget introduces a number of general measures that will have the effect of boosting small and micro studios and developers. Ukie notes that 95% of games companies are SMEs. The most eye-catching proposals are cuts to business rates and stamp duty for lower-value properties, as well as some targeted support for the digital economy.
Key measures that will affect the games industry include:
- cuts to business rates totalling £6.7 billion over five years, targeted at small businesses. This means that 600,000 small businesses, including games companies, will pay no business rates at all;
- stamp Duty on commercial properties will be changed to a marginal system, reducing the large jumps in taxation between different property values, and rates will be cut for lower-value properties. As a result, 90% of non-residential properties will be taxed less or the same;
- a new Museums and Galleries Tax Relief from April 2017 supporting the development and touring of new creative exhibitions;
- a cut in corporation tax to 17% in 2020;
- a cut to capital gains tax from 28% to 20%, and from 18% to 10% for basic-rate payers;
- self-employed people will see class 2 National Insurance Contributions abolished from April 2018, representing an average tax cut of £134 each;
- a new sharing economy tax allowance of £1,000 each for property and trading income, thereby removing taxes from income made through online platforms such as AirBnB;
- thresholds for the tax-free personal allowance and higher-rate taxpayers to be raised. The personal allowance will go up to £11,500 in 2017-18. Higher-rate income tax will be incurred from £45,000, rather than £42,500;
- new detail on the Apprenticeship Levy: from April 2017, employers will receive a 10% top-up to their monthly levy contributions in England and this will be available for them to spend on apprenticeship training through their digital account. The Government says that it will set out further details on the operating model in April and draft funding rates will be published in June;
- a new Broadband Investment Fund, in partnership with private sector investors, to support the growth of alternative broadband networks by providing greater access to finance;
- a 5G strategy in 2017 based on an assessment by the National Infrastructure Commission of how the UK can become a world leader in 5G; and
- a panel of leading experts, chaired by Kathryn Parsons, to be established to shape the £20 million Institute for Coding competition.
Responding to the announcements, Ukie CEO Dr Jo Twist said: “It’s good news for small studios. The overwhelming majority of games firms are small or micro studios, most of which have emerged in the last five years. Cuts to business rates and stamp duty will reduce the tax burden for these firms and boost growth and so will be welcomed by the UK games industry. Looking to the future we will continue to call for public support for innovative games content through National Lottery funds, just like Film and TV have at the moment. We also want to see long-term investment in talent and await further details in the Education White Paper …”. To read Ukie’s press release in full, click here.