Train2game News UKIE on the 2016 Budget

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Chancellor George Osborne announced the 2016 Budget yesterday, setting out the government’s tax and spending plans for the next year and beyond.

95% of games companies are micro, small or medium sized enterprises, and 64% of firms were incorporated in the last 5 years. The Budget introduces a number of measures which will have a positive impact on small and micro games firms. Chief among these are cuts to business rates and stamp duty for lower-value properties, as well as some targeted support for the digital economy.

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 tomorrow.”

More detail will follow once the Treasury and other Departments follow up on the speech.

Taxation
·         Cuts to business rates totalling £6.7 billion over five years, targeted at small businesses. 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
·         Corporation tax will be cut further to 17% in 2020
·         Capital gains tax will be cut 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 – removing taxes from income made through online platforms such as AirBnB.
·         Tax-free personal allowance and higher-rate threshold both 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.

Apprenticeships
·         Some 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 will set out further details on the operating model in April and draft funding rates will be published in June.

Digital Economy
·         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
·         Establish a panel of leading experts, chaired by Kathryn Parsons, to shape the £20 million Institute for Coding competition

Measuring the Industry
The government has accepted all the recommendations from the Bean Review of Economic Statistics, including:
·         Invest over £10 million in a new ONS hub for data science: “The centre for excellence will improve the Office for National Statistics’ capability to measure the changes in the UK’s digital economy and to push the frontiers of economic measurement.”

Ukie will continue to make the case to the government, setting out how the UK can be the best place in the world to make and sell games, as demonstrated in our Blueprint for Growth report.

Train2Game News UKIE on 2015 budget

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Today’s Budget was the first from the Chancellor of a majority Conservative government since 1996, and announcing a significant change in economic strategy with cuts to taxes and welfare and the introduction of a National Living Wage. You can read the full Budget speech and documents here.

With the Budget in March this year already having announced a £4 million Prototype Fund for the games industry, as well as further funding for the Skills Investment Fund, it is perhaps not surprising that today did not see any more direct announcements of support for games. However today’s announcements will still have an impact on all games companies.

Of most direct interest were the announcement on digital clusters. Ukie CEO Dr Jo Twist said in response:  “We welcome the new support for regional digital economy clusters outside of London.  Ukie will submit ambitious proposals to government supported by a major piece of research to influence the long-term Spending Round expected in November this year to support growth right across UK.”

Innovation across the country

In our letter to the Chancellor, Ukie called for investment in games hubs across the country. The government has taken steps toward this by announcing that they will work with existing clusters to find and support strengths in science and innovation. The Budget announced that “the government will invite universities, LEPs, businesses and cities to work with central government to map strengths and identify potential areas of strategic focus for different regions through a series of science and innovation audits”. Proposals generated from these discussions will be funded through announcements in the Comprehensive Spending Review that will be held in the autumn.

As a first step, the Budget also announced that the government will invest £23m in 6 “Next Generation Digital Economy Centres” over 6 sites – London, Swansea, Newcastle, Nottingham, York and Bath. These will attract match funding from the private sector to “exploit opportunities across sectors of the digital economy including the creative industries, finance, healthcare and education.”

We will be working closely with government to make sure these announcements have the best possible outcome for the games industry, especially in the clusters identified in the NESTA report.

Changes to Enterprise Investment Schemes

The March Budget proposed changes to ‘tax-advantaged venture capital schemes’ including SEIS, EIS and VCTs, which many games companies make use of. Following a consultation, which they have today published the government response to, they have confirmed several changes including:

    A new £20 million cap on the total risk finance that can be raised by a company under EIS or VCTs

    An increase in the employee limit for ‘knowledge intensive’ companies to 500 employees

    A new digital process for companies and investors using SEIS, EIS and the Social Investment Tax Relief (SITR) by the end of 2016

Business Environment

The Chancellor announced some major changes which will have an impact on all businesses in the UK, including:

    Corporation Tax will be reduced to 19% in 2017 then 18% in 2020 – keeping it the lowest in the G7, and a reduction from the 28% rate that the coalition government inherited in 2010.

    A new mandatory National Living Wage will be introduced. It will apply to the over-25s from April 2016, rising from £7.20 an hour then to over £9 an hour by 2020.

    The Employment Allowance will go up from £2,000 to £3,000, raising the amount businesses can pay employees before they incur National Insurance contributions

    Three million new apprenticeships will be created, partially funded by a new ‘Apprenticeships Levy’ on all large employers. This levy can be recovered by companies that spend money on training.

    From September 2017, families with 3 and 4 year old children will receive 30 hours of free childcare – twice the current amount.

Train2Game News Creative Industries responds to budget

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Creative Media businesses welcomed the Government’s Budget announcement today that it will continue to contribute to Creative Skillset’s Skills Investment Fund , (SIF) for another two years.

The Government will provide £4 million to co-invest with industries, matching pound for pound support  for training and development in film, high- end TV, visual effects, video games and animation.

Creative Skillset welcomed the Chancellor’s announcement of children’s television tax relief from April 2015 and look forward to discussing the establishment of appropriate mechanisms for ensuring they also contribute to enjoy co-investment in training and skills and support industry sustainability.

Josh Berger CBE, President & Managing Director, Warner Bros. Entertainment UK & Ireland , said:

“As we produce more and more world-class content in the UK, it is crucial that we continue to invest in the next generation of talent. The Skills Investment Fund is a key part of that and we welcome this further Government support.”

Ivan Dunleavy, Chief Executive of Pinewood Group said: “Growth in the creative sectors has been much faster and more impressive than forecast and industry needs to scale up and skill up quickly to meet that need. This support to training and skills is what we need to help to deliver that.”

Ian Livingstone, CBE- Chair of Playdemic, Midoki and Playmob and Creative Industries Champion for the Department for Business, Innovation & Skills said: “Creative Skillset’s Skills Investment Fund has been a massive success story for industries that must address talent development to keep pace with global competition and drive growth. Today’s commitment from the Chancellor is both vital and very welcome.”

Dinah Caine CBE, Chief Executive of Creative Skillset said:
“Creative Skillset’s Skills Investment Fund has been a game changer for our industries. We have invested directly in companies, over 1,000 new entrant trainees have been placed in the tax break industries, 376 companies have benefitted and over 10,000 training opportunities have been made available. With the additional support announced by the Chancellor today, we can continue to invest in training that will help deliver growth in these sectors and we thank him for that.”

The investment will be available from April 2015.

Train2Game News UKIE still positive after budget

UKIE LogoUK games trade body still optimistic of getting a decision from the EC soon and urges UK government to continue pushing as hard as possible for their introduction.

Responding to the Budget announcement by Chancellor George Osborne, Ukie CEO Dr Jo Twist said the following about the lack of any announcement on the long-awaited games production tax credits by the Chancellor.

Dr Twist said: “The ongoing delay to the UK games tax relief scheme has been very frustrating for UK developers. Whilst there was not any announcement about the European Commission’s decision in this year’s budget, we continue to be confident that our case is strong and that we will receive word from the EC soon. We know that the Treasury and other UK government departments have worked hard to convince Europe of the case for UK Games Tax Relief, and we will continue to do everything we can to help push tax relief over the finishing line and get this vital scheme in place for UK developers as soon as possible”.

The full Budget document (the Red Book) sets out a small change to the legislation behind Games Tax Relief, in paragraph 2.114, which would be enacted should the relief get clearance. However, the relief remains subject to state aid clearance, meaning that final European Commission approval is still required before it can go ahead.

There was other relevant news for games companies in the Budget however, with announcements of:

·         The Seed Enterprise Investment Scheme to be made permanent
·         Extra £85 million in next two years in grants to employers to support 100,000 new apprenticeships
·         £20 million over 2 years to support degree-level apprenticeships
·         Confirmation that Corporation Tax will be 21% in April, 20% from April 2015
·         £2,000 Employment Allowance announced last year will come into force in April – reduces Employer National Insurance Contributions
·         UK Export Finance will be reformed to support intangible exports, be much more proactive in support of UK businesses, and have its direct lending budget double to £3 billion at the lowest permitted interest rates.
·         R&D Tax Credit for loss-making SMEs will increase from 11% to 14.5%
·         Enterprise Zone discounts on business rates and Enhanced Capital Allowances will be extended by 3 years
·         Double the Annual Investment Allowance for businesses to £500,000 until the end of 2015
·         Provide £42 million over 5 years to set up the Alan Turing Institute to lead the world in Big Data and algorithm research

In response, Dr Twist said: “Many of these new announcements are welcome steps which should help further cement the position of the UK as the best place in the world to make and sell games. Helping SMEs to grow more quickly is particularly crucial, and the announcements on SEIS and export support should have a good impact in this regard.

“However, it is Games Tax Relief which will have a real impact in unlocking our sector’s cultural and economic potential, as the government recognised when introducing the scheme. It is vital that we get it in place as soon as possible”.