After a detailed investigation by the European Commission, the Games Tax Relief has been approved for the UK video game sector.

The Games Tax Relief was supported by a lobbying campaign from the video game industry and was originally announced by George Osborne in the 2012 Autumn Statement. Leading gaming figures suggested that jobs and workers were being lost abroad.

The tax relief is fairly substantial with developers being able to to get a break of 25% on four fifths of their costs. This was meant to begin on April 1st back in 2013, but was postponed as the EC was worried it could distort the market. They backed their claims by pointing out the sector was growing and producing titles without any state aid.

The Commission has now found that the market would not be disrupted by the plans and that the games help to promote culture. Therefore they have given the go ahead for the Games Tax Relief, although it will only apply to games that are of cultural value, which is about a quarter of the titles produced in the UK.

Commission Vice-President, Joaquin Almunia, said: “Our initial doubts have been dispelled. The proposed aid for video games is focusing on a small number of distinctive, culturally British games which have increasing difficulties to find private financing.”

There are hopes that this will increase job creation in the sector, while bringing in more money. £188 million of extra investment over the next five years is expected thanks to the tax break, while  the tax director at Deloitte, Rachel Austin, has suggested the relief will be worth £35 million per annum.

Image by the PixelLight Team.