On Wednesday 30th October, Chancellor of the Exchequer Rachel Reeves delivered a Budget that aims, according to the Government official website “to fix the foundations to deliver on the promise of change after a decade and a half of stagnation. She has set out plans to fix the NHS and rebuild Britain, while ensuring working people don’t face higher taxes in their payslips.” A raft of changes were announced in what is the biggest tax raising budget since 1993. Game Republic’s Jackie Mulligan caught up with Affiliate member Andrew McMillan Johnston Carmichael to discuss the implications of the latest Budget announcements on the games industry at Scottish Games Frenzy on 31st October….
Name three things that are positive in the Budget Announcement for the Games Industry?
It was great to hear the Chancellor and Prime Minister highlight the creative sectors as one of the key pillars of the new industrial strategy. It was good to see there is a commitment to continue to support the UK Games Fund, we have seen huge benefits of the Content Fund across the country and I’m glad that more projects will now have the chance to benefit. It is also good to see enhanced tax relief relating to VFX costs for film and TV production.
What wasn’t in the Budget, that could have been?
I would have liked to see increased tax relief for videogames. The rates are staying the same and we risk falling behind other countries because of the lack of tax reliefs in place. I do think it would be good to have progressive tax reliefs which would be tapered as games companies grow – so that smaller studios could benefit from larger reliefs which they could use to invest in developing new and disruptive IP.
What financial advice would you give game studios given the Budget changes coming in April 2025?
I would advise to model what these changes are going to mean and the impact for example of the Employer’s National Insurance Contributions. For smaller studios the employment allowance will increase, which might mean the cost of employment to them is actually less from April. But if you manage a studio with a team in the teens, you need to start to factor in the additional cost and work out what that means for your runway and commercial strategy. It is easy to bury your head in the sand, but it is important to start thinking and planning for the change. There has never been a more important time for studio bosses to properly consider the business side of things – the finances. There may be options to mitigate potential increases in costs whilst keeping your best talent, such as using salary sacrifice schemes, pensions etc. We are happy to have studios contact us if they would like some advice as every situation is different.
To get in touch with Andrew click here for his details https://johnstoncarmichael.com/about-us/our-team/andrew-mcmillan/
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