Tax Breaks – the deal is off

The new UK coalition Government has axed plans to implement tax breaks for games production, Chancellor George Osborne confirmed today.

As part of his Emergency Budget, Osborne said that subsidies for developers first proposed by the previous Labour government in April will not come into force.

He described the suggestion as ‘poorly targeted’ as part of a wide-ranging budget that outlined a number of cuts and tweaks to the economy designed to reduce the deficit and facilitate business growth.

And despite saying "I want a sign to go up above the British economy that says ‘open for business’," he made it clear that this will not be made by selectively offering tax cuts to specific fields such as games.

Instead, he went for more wide-ranging cuts that would effect all businesses in the UK, such as a cut to corporations tax and a National Insurance cuts.

He also raised VAT to 20 per cent.

Osborne also said that Ed Vaizey, the new minister for culture – who has actively courted the games industry and boldly claimed to Develop that the Conservative-LibDem government would support the trade – supports the move to not follow through with tax breaks for games developers.

The word comes, ironically, moments after Vaizey confirmed he will speak at the Develop conference next month – it will be interesting to hear him justify to the same industry he so willingly embraced why the decision has been made to drop subsidies.

Both UK games trade associations Tiga and ELSPA had lobbied Government for tax breaks on games production in line with those available in competing markets like Canada – and over the channel in France.