Ukie calls on Government to press start on growth by reforming the Video Games Expenditure Credit

The UK video games industry, a global leader in creativity and innovation, is urging the Government to reform the Video Games Expenditure Credit (VGEC) to ensure the sector remains internationally competitive and continues to drive growth.

Following an extensive piece of research with Nordicity, Ukie, the trade body representing the UK’s video games and interactive entertainment sector, is calling for two key changes to the VGEC:

• A ‘games growth’ rate of 53% for projects with budgets of £10 million or lower, aimed at supporting smaller studios and encouraging creativity across the industry.
• An increase in the current relief rate to 39% for larger projects with budgets exceeding £10 million (Enhanced Relief) and removing the 80% cap on qualifying expenditure that currently limits the support available.

These reforms will position the UK as having the most internationally competitive tax incentives for the video games industry, incentivising further investment in the UK while ensuring continued growth.

Nick Poole, Ukie CEO said:

“The UK’s video games industry has seen substantial growth, driven by the VGEC, but this competitive advantage has been eroded over the past decade. Our industry has the talent, the creativity, and the ambition to lead the world in game development. Now is the time to supercharge growth with a VGEC that fully supports studios of all sizes. By pressing start on this enhanced approach, it will not only support the industry’s long-term sustainability but also create new opportunities for job growth and economic impact.

The business case for reform:

• Additional GVA: After five years, the proposed changes would generate an additional £479m in Gross Value Added (GVA) annually.
• Job Creation: The changes are projected to support an additional 5,969 jobs in the UK.
• Return on Investment: The overall return on investment in this scenario would generate an additional £1.87 for every £1 in VGEC disbursements, on top of the current £3.20 for every £1 invested.

While the VGEC has supported significant growth in the UK’s video games sector, developers still face challenges in accessing finance, often relying on overseas equity investment or eventual sale. This reliance puts the UK at risk of becoming part of a wider ‘incubator economy,’ where talent and innovation are not retained.

Call for Expanded Financial Support:

• Ukie also calls for the UK Games Fund to be maintained and increased beyond its current £5.5 million annual budget to help meet growing demand for support in developing UK-based games and original intellectual property (IP).
• A broader mix of financial options, including grants, loans, guarantees, equity, and debt, must be available to developers, with the Government encouraging funding bodies like the British Business Bank to provide debt and equity finance options for medium-sized creative industry companies, similar to the support provided for digital and tech sectors.

The UK’s creative industries already contribute £126 billion annually to the UK economy, with video games being a standout success. Ukie urges the Government to engage more closely with the sector, update outdated classifications, and align financial support to the needs of today’s industry.

“The UK games industry is a global success story, but maintaining that position requires bold action. Reforming the Video Games Expenditure Credit to better support both small and large studios will ensure we continue to attract investment, create jobs, and produce world-leading games. We want to guarantee the future of an industry that delivers both cultural and economic value to the UK” – Maria Sayans, CEO ustwo games.