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Chancellor cans planned game biz tax break

And 20 per cent VAT hike won't help sales, either

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Conservative Chancellor of the Exchequer George Osborne has scrapped a Labour plan to provide tax relief for the videogames industry.

The subject of much lobbying by the games development business, the tax relief programme was announced by the previous Chancellor, Alistair Darling, during his March 2010 budget.

"I will offer help to the computer games sector similar to the steps which are helping restore the fortunes of the British film industry," he said at the time.

Yesterday, the UK games developer trade organisation Tiga took a petition to Downing Street calling on Osborne to follow Darling's lead and confirm the tax relief plan.

Tiga maintained that the tax break would "protect or create 3550 graduate level jobs" and "secure £457m in investment... in the sector". In turn, this would generate £415m in tax receipts, Tiga claimed - more than enough to cover the revenue lost to the Exchequer through the relief.

Developers in France, Canada, South Korea and a number of other countries are offered tax breaks, provided by governments to encourage the hi-tech sector. This has lead many companies to shift work to studios based there.

The Treasury's own budget numbers claimed the decision to drop the tax relief, which would kick in in the 2011-12 tax year, will save £40m during that period, rising to £50m in 2012-13 and the same again in 2013-14 and 2014-15. ®

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