The UK Government is to adopt a tax relief plan put forward by games developer association TIGA.
The plan will offer financial incentives to companies making games that fit certain cultural criteria. Developers who make profitable games will pay less tax on their profits, and the studios behind unsuccessful games will get a tax credit to reduce losses.
"Games tax relief will increase employment, investment and innovation in the UK videogames sector," said TIGA boss Richard Wilson.
"Our research shows that games tax relief over a five year period should create or protect 3550 graduate level jobs, increase or safeguard £457 million in development expenditure and encourage developers to adopt new business models and create new intellectual property".
To qualify, companies must fall within the scope of UK corporation tax. They must also pass a cultural test scoring against a criteria that looks at European heritage, languages, game locations, innovation, narrative and the location of the development and development staff.
The news was announced yesterday by Chancellor Alistair Darling. The Entertainment and Leisure Software Publishers Association welcomed the news, with chairman Andy Payne stating, "It is absolutely heartening news to hear that the Chancellor has offered support for one of the country’s leading creative digital businesses. This is a very significant day for the computer and videogames business in the UK".
"Videogames are the Hollywood of the 21st century," added Wilson. "With games tax relief in place, the UK is guaranteed a leading and successful role".