TIGA proposes an increase in VGTR to boost the UK video games industry and economic growth

Today, TIGA, the trade association representing the video games industry, has published a new report with analysis from Games Investor Consulting evidencing the benefits of strengthening Video Games Tax Relief (VGTR). The report, Going for Growth: Growing the UK Video Games Industry Through VGTR (TIGA, 2023), demonstrates that increasing the rate of VGTR from its current rate of 25 per cent to 32 per cent of qualifying expenditure would create nearly 1,900 additional full-time development jobs over five years.
 
TIGA’s 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 per cent 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 actually claim VGTR in 2014 until December 2021 has been 9.9 per cent. 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’s report shows that between 2022 and 2026 raising the rate of VGTR relief from its current 25 per cent to 32 per cent 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.
• £739 million additional estimated GDP contribution.

 
An alternative way of bolstering VGTR would be to increase the proportion of qualifying expenditure from 80 to 100 per cent while maintaining the current relief rate of VGTR at 25 per cent. 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.
• £659 million additional estimated GDP contribution.

 
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.
 
Dr Richard Wilson OBE, CEO of TIGA said:
 
“The Government should strengthen VGTR to reinforce growth in one of the UK’s leading creative industries. Video games development provides high skilled employment in clusters around the UK in an export-focused industry. Strengthening VGTR will stimulate economic growth and enable our industry to secure a larger share of the global market for video games production.”
 
Jason Kingsley OBE, TIGA Chairman and CEO and Creative Director at Rebellion, said:
 
“Increasing the impact of VGTR will enhance the UK as a centre for games development and create more jobs, incentivise more investment and generate more tax receipts for HM Treasury.”